Russian LNG producer Novatek reports results affected by Ukraine drone attack and delays in Arctic LNG II project

NOVATEK , the Russian natural gas company and operator of the Yamal LNG export plant and developer of the delayed Arctic LNG II facility hit by Western sanctions on equipment imposed because of the Ukraine invasion, has reported operational results for the first quarter of 2024 as it continued to supply LNG cargoes to the European Union .

Novatek’s results statement showed it had resumed full production at the Ust-Luga complex, the huge Baltic Sea fuel export terminal and condensate processing plant that was damaged by fire on January 21, 2024, after reportedly being the subject of a Ukrainian drone attack.

Novatek resumed gas condensate processing at its Ust-Luga complex on February 11 after fire damage was repaired.

The company said it processed 1.4MT of stable gas condensate at the previously damaged Ust-Luga facility during the first quarter of 2024, which was 22 percent lower compared with the first three months of 2023 when 1.8MT was processed.

Natural gas sales

Novatek’s first-quarter 2024 total natural gas sales volumes to the end of March, including LNG, amounted to 21.47?billion cubic metres, a decrease of 3.8 percent compared with the same three months of 2023 when the total was 22.33 Bcm.

Novatek said its hydrocarbon production totaled 167.4 million barrels of oil equivalent, including 21.12 Bcm of natural gas and 3.5 million tons of liquids comprising gas condensate and crude oil.

This represented an increase of almost 2.5 percent in total hydrocarbons production compared with the first quarter of 2023 when the total was 163.9 million boe.

Novatek said it processed 3.3 million tonnes of unstable gas condensate at the Purovsky Processing Plant, which was 2.8 percent less than the 3.4MT processed in the prior-year quarter.

Preliminary total sales volumes of liquid hydrocarbons amounted to 4.3MT, which?was?11 percent higher than in the first quarter of 2023.

Yamal cargoes

Novatek added that it had 0.2 Bcm of natural gas, including LNG, and 1.2MT of stable gas condensate and petroleum products in storage or transit and these were recognized as inventory.

Cargoes from the Yamal plant in the Russian Arctic are still being unloaded in EU nations with the UK being the only LNG importer in Western Europe to formally ban LNG from Russia.

The main EU destinations for Yamal LNG in the first quarter of 2024 have been Belgium, France and Spain.

LNG production started in December 2023 at the first Train at the Arctic LNG II project on the Gydan Peninsula on the Gulf of Ob, though Novatek has failed to ship any cargoes so far after reported problems with the liquefaction processing.

The second and third liquefaction Trains were now delayed as well and are scheduled to begin operations in 2025.

The Arctic LNG II Trains and facilities are being pre-built at a fabrication yard in the Murmansk region of Russia onboard gravity-based structures and are being towed to the Gydan Peninsula project site.

Each Arctic LNG II liquefaction Train installed on the platforms will have production capacity of 6.6 million tonnes per annum to total almost 20 MTPA in nameplate capacity.

During 2023 a total of around 90 gas wells were completed at the Utrenneye gas field to provide feed gas for Arctic LNG II.