Novatek Ships Yamal LNG to Japan, Uncertain if Delivery Was Made Via Arctic

Novatek has previously delivered LNG to far away countries like Brazil, India, South Korea and China, in additional to its regular deliveries to ports in Western Europe. As part of the company’s partnership with the French energy major Total, Japan is expected to receive significant amounts of natural gas from the Yamal LNG project. 

“Commencing LNG shipments to the Japanese market represents an important milestone for the Company as Japan is an important LNG market and one of the priority destinations in our LNG marketing strategy,” explained Leonid Mikhelson, Novatek’s Chairman of the Management Board.

Questions remain if the delivery was made via the shortcut of the NSR or via the Suez Canal route at almost twice the distance. Satellite tracking data on the current fleet of thirteen, out of an eventual total of fifteen, specialized ice-class Arc7 LNG carriers plowing the Arctic waters for Novatek and its shipping partners, indicate that none of these vessels currently operates in proximity to the Tobata LNG terminal in Japan. 

Furthermore, Novatek’s press release makes no mention if the NSR was used for the delivery. “Further development of our logistical chain using the Northern Sea Route and a transshipment terminal in Kamchatka will expand LNG supplies to Japan as well as strengthen trade and economic links between our respective countries,” Mikhelson concluded.

No deliveries on the NSR before July

As the eastern reaches of the NSR are still clogged with ice it appears likely that the delivery occurred via transshipment in western Europe where LNG was transferred from an Arc7 carrier to a conventional LNG carrier. Novatek did not respond to inquiries from HNN. 

In 2018 the first delivery via the NSR was made in the middle of July by a convoy consisting of the Vladimir Rusanov and Eduard Toll. The arrival of the vessels at the port of Jiangsu Rudong was celebrated by Russian and Chinese officials. At the time Mikhelson heralded the journey as the beginning of a new era of Russia LNG shipment to Asia. 

The Yamal-Nenets Autonomous Region, where the Yamal LNG project is located, is home to the world’s largest natural gas producing area. It represents approximately 80 percent of Russia’s current natural gas production and approximately 15 percent of the world’s gas production. Novatek’s strategy to use ice-capable vessels to expeditiously deliver LNG to Asia is an important part of delivery Russian gas to the global markets.

Year-round to Asia?

While Novatek, at least publicly, remains confident that it can provide LNG deliveries along the NSR to Asia during most of the winter months, reality, at least thus far, remains starkly different. As the company cannot ship in an eastward direction during winter it is utilizing the transshipment of LNG off the Norwegian coast near Honningsvåg. The operation began in November and is expected to be completed by the end of June. As of June 22nd, at least one Arc7 LNG carrier, the Nikolay Yevgenov, was located in the reloading zone transferring LNG to another carrier. 

The gas company maintains that with the introduction of a new fleet of powerful Arktika-class nuclear icebreakers, operations along the NSR will be possible for about nine months out of the year. In order to provide year-round access to Asia via the NSR, the massive yet-to-be built LK-100ya Lider-class icebreaker will be required.

Japan steps up engagement

In addition to receiving LNG shipments, Mitsui & Co. and Mitsubishi Corporation, two of Japan’s largest general trading companies will acquire a 10 percent stake Novatek’s new mega project, Arctic LNG 2. Additionally, financing assistance will come from the Japanese government. The deal is slated to be formally agreed to later this week at the G20 summit in Osaka, Japan.