Solomon’s liquefaction – Newspaper Kommersant No. 196 (7397) of 10/21/2022

NOVATEK has a new opportunity to acquire the fields of one of the largest in the Russian Federation, the Tambey cluster, the licenses for which are owned by Gazprom. The government, according to Kommersant’s information, is considering the possibility of returning licensed areas of the cluster with reserves of more than 7 trillion cubic meters to the unallocated fund, after which NOVATEK could participate in an auction to receive them. The reason is the long-term non-involvement of reserves in development. Gazprom, however, secured itself by transferring licenses to a joint venture with Rusgazdobycha and promising to start commercial production in 2026 with the supply of gas to a processing complex in the Baltic.

The government is considering the possibility of transferring subsoil plots or parts of them to the unallocated fund “in case of their long-term non-involvement in the development of reserves put on the state balance,” follows from the minutes of the meeting with Deputy Prime Minister Alexander Novak dated September 2 (Kommersant has it). Until November 26, the Ministry of Natural Resources, Rosnedra and the Ministry of Energy must work out the issue of necessary changes to the legislation of the Russian Federation.

Regulators also need to speed up the preparation of a draft comprehensive program for the development and use of Yamal resources, which fixes a list of fields whose reserves should be used for the extraction and production of LNG. The report to the government should be ready by March 3, 2023.

In NOVATEK and Gazprom, Kommersant did not answer. The Ministry of Natural Resources reported that the issues are being worked out, until the position is approved, the department cannot comment on them.

The return to the undistributed fund allows the authorities to put the license up for auction again. According to Kommersant sources familiar with the situation, first of all, we are talking about the licensed areas of the Tambey cluster of Gazprom.

At the same time, it is possible that in the future they will be put up for auction and distributed among market players separately, and not in a single cluster. NOVATEK is showing the greatest interest in the Malyginskoye field with C1 + C2 reserves of about 2 trillion cubic meters, two Kommersant interlocutors say.

The Tambey group includes the Severo-Tambeysky, Zapadno-Tambeysky, Tasiysky and Malyginsky license blocks. Gazprom received them in 2008 without competition by order of the government as the owner of the Unified Gas Supply System (UGSS), licenses for them are valid until 2028. Based on the results of geological exploration, Gazprom came to the conclusion that the first three sites of the group constitute one giant Tambeyskoye field. According to the state balance sheet, the group’s reserves amount to 7.3 trillion cubic meters, including 2.5 trillion cubic meters in category C1 and 4.8 trillion cubic meters in category C2.

NOVATEK has already made several attempts to acquire these fields, most recently in April 2021 (see “Kommersant” dated April 19). Then the head of the company, Leonid Mikhelson, convinced President Vladimir Putin that it would be strategically correct to direct the reserves of the entire cluster to the production of liquefied natural gas (LNG). NOVATEK was ready to buy the fields from Gazprom or exchange them for its own shares.

But the head of Gazprom, Alexei Miller, stopped these attempts: already in November 2021, Gazprom announced that it was going to develop the asset with Rusgazdobycha – subsequently, the companies established a joint venture, Gazprom dobycha Tambey, to which the licenses of the Tambey cluster were to be transferred. According to the new scenario, production at the high ethane field should begin in 2026 to become the raw material base for the ethane-containing gas processing complex in Ust-Luga. Prior to this, Gazprom believed that the Tambey group’s reserves should be held for future pipeline projects in order to provide for Russian consumers in the distant future, as well as customers in Europe.

Against the backdrop of the rupture of relations with the EU, Gazprom’s demand for pipeline gas for export has sharply decreased, but the possibility of LNG supplies remains.

According to the results of 2021, NOVATEK’s proven gas reserves according to SEC standards (they are much more stringent than the Russian classification) amounted to 2.26 trillion cubic meters of gas, according to PRMS – 3.94 trillion cubic meters. The head of NOVATEK, Leonid Mikhelson, said that the company needs an additional resource base to achieve the production of 70 million tons of LNG by 2030. At the same time, he noted on October 13 that there is “nothing interesting” for NOVATEK in the unallocated fund in Yamal and Gydan (quote from Interfax). In June, answering the question whether the company is still interested in the Tambey field of Gazprom, Mr. Mikhelson said: “There are no negotiations, the field is Alexei Borisovich (Miller.— “b”)”. “I didn’t say that NOVATEK needs to make LNG, Russia needs to do it,” he added (quoted by Interfax).

Obviously, the Tambeyskoye field, provided that its development is significantly behind the approved schedule, can be transferred to other interested participants through the re-licensing procedure, Mikhail Grigoriev, head of the Gekon consulting center, believes.

In his opinion, the proposal is absolutely correct: by providing subsoil plots for use, the state, as the owner of the subsoil, expects that, in accordance with the terms of subsoil use, approved programs of geological exploration and field development projects, they will be put into operation. “Violation of the conditions for the use of subsoil, which is the deviation of the timing of geological exploration, is an obvious sufficient reason for the withdrawal of the site and its involvement in economic circulation through re-licensing,” he said.

According to Sergei Kondratiev from the Institute of Energy and Finance, when transferring a deposit to the state fund with a subsequent tender for a development license, the winner can pay up to 40-45 billion rubles. But, according to the analyst, this scenario is unlikely, since Gazprom will try by all means to prevent the loss of the Tambey cluster. Its return to the state fund, adds Mr. Kondratiev, may create problems with the implementation of the project for the construction of an LNG plant and a gas and chemical complex in Ust-Luga together with Rusgazdobycha.

Tatyana Dyatel, Dmitry Kozlov