NSR to stay open until December: Novatek

The 16.5mn t/yr Yamal LNG project expects to continue delivering LNG along the Northern Sea Route (NSR) to the Pacific this navigation season until the end of December, operator Novatek said today.

In 2018 and 2019, Yamal shipped its final cargoes of the season along the route in October. But ice cover has remained low in recent weeks, making it easier for Arc7 ice-class LNG carriers to navigate through to the Bering Strait and into the Pacific.

The wide inter-basin des price differential offers an incentive to maintain deliveries into the Pacific, which could slow Yamal LNG flows to Europe.

First Murmansk STS in November

Yamal will carry out its first ship-to-ship (STS) transfer in the Murmansk region next month, Novatek said today — something that could be required to meet the higher demand placed on its Arc7 carrier fleet by use of the NSR deeper into winter.

Yamal has used Norway's Honningsvag port to make transshipments from its Arc7 vessels in previous years, as its shipping capacity was constrained following early start-up of its second and third trains. Only the 15-strong Arc7 fleet — fully delivered by the end of 2019 — has been able to load at Yamal's Sabetta terminal in mid-winter.

Yamal had been due to begin STS operations at Murmansk's Kildin Island this winter, in conjunction with its use of the purpose-built fifth storage tank at Belgium's Zeebrugge terminal. Novatek did not specify where in the Murmansk region it intends to conduct the transshipment.

Using a transshipment facility closer to Sabetta would probably give the Yamal project much greater shipping capacity this winter, even after the NSR closes. The 15 carriers can make 22-23 deliveries a month to northwest Europe — based on a round trip time of around 20 days — in line with the project's average winter loadings.

Train 4 to start commissioning in coming weeks

Yamal's 940,000 t/yr fourth train is scheduled to begin commissioning works over the "upcoming weeks", Novatek said today. It had previously postponed the start several times.

Production was cut at Yamal between late September and early October as the fourth train was connected to the central flaring system.

Term supply to rise in 4Q

Yamal's term buyers deferred some LNG deliveries from summer to this winter, Novatek said today, suggesting the project will have to cut spot offerings in the fourth quarter to meet contracted supply.

Yamal sold 64pc of its LNG production under term contracts in the third quarter, but noted that this was lower than anticipated as buyers sought to push back volumes, upping its spot sales to make up for the shortfall. Yamal sells all its term supply under oil-indexed contracts, which have generally held in backwardation through the summer into the fourth quarter, providing an incentive for term buyers to defer contracted supply until later this year.

By Samuel Good