Novatek Signs Funding Deal for Arctic LNG-2 Carriers

Novatek has signed a financing deal paving the way for the construction to begin on the first four LNG carriers required for its Arctic LNG-2 project.

Smart LNG, Novatek’s joint venture with Russian shipowner Sovcomflot, has signed a lease financing agreement for the vessels with state development bank VEB.RF, Sovcomflot said in a notice on February 10.

VEB.RF ordered the ships’ construction last year at the Zvezda shipyard in the Russian Far East. After reaching the deal with Smart LNG, VEB.RF has begun making payments for vessels to Zvezda, it said in its own statement. Rosneft, which owns the shipyard alongside Gazprombank, has confirmed receiving these payments.

Smart LNG has also signed long-term agreements to charter the vessels out to the Arctic LNG-2 consortium, consisting of Novatek, France’s Total, China’s CNPC and Cnooc Ltd., and Japan’s Jogmec and Mitsui.

Arctic LNG-2 is due to come on stream in 2023, producing up to 19.8mn mt/yr of LNG. The terminal will require 15 Arc7 carriers in total to transport its LNG to Asian and European markets via the ice-covered Northern Sea Route on a year-round basis.

VEB.RF has pledged to fund the entire fleet’s construction.