Novatek Wins Yamal-Nenets Licence

The Novatek/Gazpromneft 50-50 joint venture Arcticgas has successfully bid roubles 1.4bn  ($24mn) for the right to explore for and produce oil and gas in the Osenniy area of the Yamal-Nenets Autonomous Region (YNAO) in the far north of Russia, Novatek said December 19.  

The block's estimated hydrocarbon resources are 4.411bn barrels of oil equivalent according to the relatively generous Russian resource classification which discounts the cost of the field's production.  The licence term is 25 years. Arcticgas' reserves according to the international Petroleum Resources Management System were 695bn m³ at end-2014.

The Osenniy licence area borders Arcticgas’ Samburgskiy licence area, which includes the Urengoiskoe field. Samburgskoe produces 7bn m³/yr of gas and 0.9mn metric tons of gas condensate/yr. Urengoiskoe produces 13bn m³/yr.

The acquisition expands the resource base in the Nadym-Pur-Taz region of YNAO where Novatek plans "significant long-term projects" to increase deeper-layer gas and condensates production that are within reach of the Gazprom transportation pipeline network, suggesting this is separate from its growing LNG export ambitions.

Like Rosneft, Novatek would like to be able to sell Russian pipeline gas in Europe as well as continue to grow market share in Russia itself as domestic prices become more market-based, but Gazprom still has the monopoly on pipeline exports; and the president, Vladimir Putin, has not said this will change.

Novatek has made a number of other licence or company acquisitions lately, also apparently not connected to the LNG plans although they have been in the far north, still the source of nearly all Russia's gas.