China National Offshore Oil Company, or CNOOC, announced it has signed a deal worth $1.6 billion to build equipment for the Yamal LNG project in Siberia. The project is currently scheduled to begin in 2017 and annual capacity per LNG train is expected to be 5.5 million tons – all of which has already been signed to contracts.
The Yamal LNG project is a $27 billion joint venture between China’s National Petroleum Company (CNPC) and Russia’s Novatek, the largest and second-largest energy companies in each respective country.Novatek holds a 60% stake, while CNPC and France’s Total SA (ticker: TOT) each hold a 20% stake. According to Total’s web site, three LNG trains are planned for construction and will bring total capacity to 16.5 million tons. The site also says the region is ice bound nine months of the year, and the project will introduce the industry’s first icebreaker tankers to allow transport. Nine ice-class vessels are currently under construction and are priced at $300 million apiece. The vessels will be designed to break through ice up to six feet in thickness.
CNPC and Gazprom, Russia’s largest oil company, signed a 30 year, $400 billion deal for natural gas in May 2014. Gazprom says it is currently considering building an LNG plant in the Yamal region and has development licenses throughout the area. Total reserves are estimated at nearly 40 trillion cubic meters of gas.
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