(Bloomberg) -- Total SA will take 10 percent stake in a multibillion dollar liquefied natural gas project in Russia’s frozen north from Novatek PJSC.
Total is aiming to become a key global LNG player, competing with Royal Dutch Shell Plc and Exxon Mobil Corp., after it snapped up assets from Engie SA last year. The world’s biggest oil companies are also promoting cleaner-burning natural gas as they attempt to stay profitable, and relevant, in a world that’s increasingly demanding less polluting fuels. For Novatek, Total’s involvement would provide much needed funds for a venture that may cost as much as $20 billion.
“This project fits into our strategic partnership with Novatek and also with our sustained commitment to contribute to developing the vast gas resources in Russia’s far north, which will primarily be destined for the strongly growing Asian market,” Total’s Chief Executive Officer Patrick Pouyanne said in the statement. “Arctic LNG 2 will contribute to our strategy of growth in LNG by developing competitive projects based on giant low-cost resources.”
The French energy giant’s direct and indirect holding in Arctic LNG 2 in the north of Siberia will be about 21.5 percent. Total owns about 19 percent of Novatek, which plans to retain a 60 percent share in the gas project in the north of Siberia, it said in a statement Thursday. The company has the option to raise its direct holding to as much as 15 percent should Novatek reduce its share to below 60 percent.
The companies expect to take a final investment decision on the project next year. It will have a capacity of 19.8 million tons a year, or 535,000 barrels of oil equivalent a day, according to the statement. The first of three production units is likely to start in 2023.
Total and Novatek have already teamed up at the Yamal LNG project, which started output last year.
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