Arctic LNG 2 Project

The Arctic liquefied natural gas (LNG) 2 project is being developed in the Gydan Peninsula in the northern part of Siberia, Russia.

The project is expected to have a production capacity of 19.8 million tons (Mt) of LNG a year. It is being jointly developed by Novatek (60%) and Ekropromstroy (40%) with an estimated investment of $25.5bn.

Total signed an agreement with Novatek to acquire 10% interest in the project, in May 2018. The agreement includes an option to acquire an additional 5% interest in future, in case Novatek opts to decrease its interest in the project.

The final investment decision (FID) for the project is expected to be taken in March 2019, while first production is targeted to be achieved by the end of 2023.

The Arctic LNG 2 project is one of several projects being undertaken by Novatek in the Russian Arctic region. Other projects include the Yamal LNG and Arctic LNG 3 projects.

Arctic LNG 2 location, geology, and reserves

The Arctic LNG 2 project aims to develop approximately seven billion barrels of oil-equivalent from the onshore Utrenneye gas and condensate field located in the Gydan Peninsula at the Yamal-Nenets autonomous district.

The gas field holds total reserves of 1,978 billion cubic meters (bcm) of gas along with 105Mt of liquids. The hydrocarbon reserves are present in the mid-Jurassic deposits of the Utrenneye gas field.

Novatek conducted drilling and testing of well #294 at the field in September 2018, which led to the discovery of two new deposits and confirmed their commercial viability. The reserves of the two new deposits are estimated at 405bcm of natural gas and 40Mt of gas condensate, subject to confirmation by the Russian state reserves commission.

The additional reserves of the deposits are expected to increase the reserves of the field to two trillion cubic meters.

Arctic LNG 2 project details

The Arctic LNG 2 project will include the installation of three gravity-based structures (GBS) in the Gulf of Ob and associated LNG storage facilities having a total capacity of 687,000m³. The GBS will be concrete-built structures having a length, width and height of 330m, 152m and 30m, respectively.

The GBS will host three natural gas liquefaction trains having a production capacity of 6.6Mt of LNG a year each. The liquefaction trains will be installed with a feed gas compressor and two boil-off compressors each.

LNG export from Arctic LNG 2

The LNG produced from the Arctic LNG 2 project will be supplied to Asian LNG markets via the Northern Sea route by a fleet of ice-class LNG carriers. The Northern Sea route was developed as a LNG shipping route for the Yamal LNG project.

The LNG export vessels pass through the Northern Sea route via the Bering Strait to reach Asia in 15 days.

Contractors involved

Siemens was contracted by Novatek in February 2019 for the supply of compressor equipment to be installed on the liquefaction trains.

Saipem, in a joint-venture with Renaissance, was awarded an onshore engineering and construction contract worth $2.5bn for the construction of the GBSs.

Olav Olsen was subcontracted by Saipem to provide the front-end engineering and design for the GBS.

Novatek signed an agreement with Nuovo Pignone in December 2018 to supply turbo machinery equipment comprising gas compressor turbines and gas turbine generators for the project.