MOSCOW (Reuters) - Russia’s Novatek has launched a second liquefied natural gas (LNG) production train at its plant on the Yamal peninsula ahead of schedule, as Moscow is trying to turn into a significant global player on the super cooled gas market.
Novatek, which controls Yamal LNG in which France’s Total along with China’s CNPC and the Silk Road Fund are minority shareholders, said that the launch was made six months ahead of its initial schedule. Yamal ships LNG to Asia and Europe.
Along with LNG, the Yamal plant is producing gas condensate, a type of light oil, which can replace some Iranian supplies to Middle Eastern companies as the U.S. reimposes sanctions on Tehran, trading sources said.
The second LNG train’s annual capacity is 5.5 million tonnes, which will double Yamal’s output. Novatek is also building a third production train which is expected to be launched next year, raising annual LNG output to 16.5 million tonnes.
Novatek’s chairman and co-owner Leonid Mikhelson said on Thursday that the two Yamal LNG trains currently represent around 3.5 percent of the global LNG market, a growing area for the world’s energy producers.
“Our strategic goal is to produce between 55 and 60 million tonnes annually by 2030,” Mikhelson said in the statement.
Novatek is also planning to launch its second LNG plant, Arctic LNG-2, after 2020.
The launch of the second LNG train comes just days after China proposed tariffs on U.S. liquefied natural gas, widening the trade war between the two countries.
In July, Novatek delivered the first LNG cargo to China via the Northern Sea Route alongside the Arctic coast, which drastically cuts delivery time to Asia. CNPC plans to start lifting at least 3 million tonnes of LNG from Yamal from 2019.
At its peak, Yamal will produce over 1 million tonnes of gas condensate a year and Novatek has ordered special vessels for these shipments.
In the first six months of the year, Novatek, which is Russia’s largest private gas producer, shipped 234,000 tonnes of Yamal condensate, selling the first cargo to commodities trader Vitol via a tender earlier this year.
According to Reuters data and two trading sources, Emirates National Oil Company (ENOC) has bought around 37,000 tonnes of condensate via a tender from Yamal - that cargo was loaded on a tanker at Yamal’s Sabetta port at the end of July.
Iran has been one of the key gas condensate suppliers to ENOC but further exports could be complicated with sanctions due to be reimposed on Iran’s energy sector on Nov.4.
One of the trading sources said he believed that ENOC was making a test purchase of the Yamal condensate ahead of the sanctions coming into force.
Novatek and ENOC did not reply to Reuters requests for a comment.
Additional reporting by Josephine Mason in BEIJING; Writing by Katya Golubkova; editing by Jason Neely and Kirsten Donovan