* Energy Ministry circulates draft proposal for discussions
* Russia expected to open up LNG exports from 2014
* Novatek, Rosneft in most advanced stages of new LNG
* Novatek wins preliminary backing from Chinese banks
By Katya Golubkova
MOSCOW, Sept 10 Novatek has secured
preliminary backing from leading Chinese banks for its Yamal LNG
project, bringing Russia's largest independent gas producer a
step closer to breaking Gazprom's export monopoly.
With the global trade in liquefied natural gas (LNG)
expected to grow by a third in the next five years as the United
States and Australia boost production, Russia is under pressure
to complete new projects.
The $20 billion Arctic Yamal LNG project would be the first
Russian plant built since Gazprom, the world's top producer of
conventional gas, launched its Sakhalin-2 facility in 2009.
Key to unlocking the financing is allowing Gazprom's rivals
to export the super-cooled fuel, and a source familiar with the
matter told Reuters on Tuesday that the Russian Energy Ministry
had circulated a proposal to that effect.
Novatek, whose largest shareholders are CEO Leonid Mikhelson
and commodities trader Gennady Timchenko, said that along with
China National Petroleum Corp (CNPC) it had signed a memorandum
with Chinese banks on project financing.
China Development Bank Corporation, Bank of China
, China Construction Bank and Industrial
and Commercial Bank of China - the world's largest
bank by market capitalisation - will consider actively
participating in the external project financing transaction.
Novatek, in a statement, did not specify the size of the
financing but said that other financial institutions, including
Russian ones, are likely to support the project too.
Yamal LNG, which is being developed by Novatek, France's
Total and China's CNPC, is scheduled to start
producing LNG in 2016 with a view to supplying 16.5 million
tonnes of the tanker-shipped fuel by 2018.
ENERGY MINISTRY PROPOSALS
Both Novatek and state-controlled oil major Rosneft
have secured buyers of LNG from yet-to-be-built
plants, but need the ministry's reforms to be adopted to win
The source told Reuters that the Energy Ministry had finally
drafted a proposal that would liberalise exports of LNG and
allow companies other than Gazprom to sell abroad.
The proposal would allow LNG exports by companies that hold
licences to build LNG plants, or to send the gas for
liquefaction to a plant determined by the government.
The draft also proposes allowing LNG exports by companies
with state holdings of at least 50 percent - if they send LNG
abroad from offshore fields or from production-sharing
"We expect to see new LNG contracts after the law comes into
a force in January 2014," BrokerCreditService said in a note on
The Russian authorities had planned to open up LNG exports
from 2014, with a requirement that Novatek's and Rosneft's
projects would ship gas to Asia only and not challenge Gazprom's
exports to Europe.
Gazprom, despite having agreed on cooperation with CNPC
in 2004, has yet to finalise terms on piping gas to
Rosneft's planned LNG plant in Russia's Far East involves
Exxon, has an estimated cost of $15 billion and a production
target of 2018.
The Energy Ministry declined immediate comment. Under an
existing 2006 law, Gazprom is the only company allowed to ship
gas out of Russia.
Gazprom had earlier said it had discussed the possibility of
supplying LNG to China from a planned plant near the Pacific
port of Vladivostok.