NOVATEK Wants to Buy the Tambeyskoye Field from Gazprom

According to Kommersant’s information, the head of NOVATEK, Leonid Mikhelson, has made a new attempt to get from Gazprom the giant Tambey group of fields with reserves of 7.3 trillion cubic meters of gas. According to Kommersant’s sources, Mr. Mikhelson was able to convince Vladimir Putin that it would be strategically correct to channel the cluster’s reserves for the production of liquefied natural gas. He also asked the president to consider selling these assets to NOVATEK with payment in cash and shares. But Gazprom does not want to give up the fields. The dispute keeps the overall strategy for the development and processing of Yamal gas in limbo.

According to Kommersant’s information, the head of NOVATEK Leonid Mikhelson on April 13 at a meeting with Vladimir Putin again raised the issue of the need to transfer the deposits of the Tambei cluster in Yamal to NOVATEK. Licenses for their development now belong to Gazprom, which planned to send this gas into a pipe. NOVATEK has already applied for the buyout of these assets of Gazprom in 2017 to develop its LNG cluster in Yamal. Then the monopoly thwarted the attempts of a competitor to get the deposits, but so far it has not provided its own clear plans for their development. Now in the reporting of “Gazprom” the Tambey group is not indicated among the promising fields, which are expected to be commissioned this decade.

The Tambey group includes the North-Tambey, West Tambey, Tasi and Malyginsky license areas. Gazprom received these blocks in 2008 without a tender 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 blocks of the group constitute one giant Tambeyskoye field. According to the state balance sheet, the reserves and resources of the entire Tambei group as of January 1, 2020 amount to 7.3 trillion cubic meters, including 2.5 trillion cubic meters in the C1 category and 4.8 trillion cubic meters in the C2 category, calculated the head of the Gekon consulting center Mikhail Grigoriev. NOVATEK’s proven gas reserves in 2020 according to SEC standards (they are much more stringent than the Russian classification) amounted to 2.2 trillion cubic meters of gas, according to PRMS – 3.9 trillion cubic meters. Potential acquisition of the Tambei group could double NOVATEK’s reserves.

According to Kommersant’s interlocutors, this time Mr. Mikhelson managed to convince Vladimir Putin that it is strategically more profitable to send gas from the Tambeyskoye field to liquefaction than to a pipe. After that, on April 15, Mr. Mikhelson went to Petersburg to discuss the deal with Gazprom CEO Alexei Miller – the meeting was reported by the Gazprom press service, without disclosing the topic of the conversation.

According to one of Kommersant’s sources, Leonid Mikhelson offered Alexey Miller to sell the Tambey group, paying for the deal partly in cash and partly in NOVATEK’s securities (Gazprom already owns 9.99% of the shares). The question of the creation of a joint venture of companies in Yamal, the question of which was raised in 2017, is now not being discussed, another source said to Kommersant. However, according to Kommersant’s information, Gazprom still does not intend to sell the Tambey group. Gazprom declined to comment, NOVATEK did not respond to Kommersant.

The fate of the Tambei group is a key issue in the development of not only production, but also gas processing in Yamal, since the deeply located deposits of the field are believed to have gas with a high ethane content (the so-called wet gas).

It must be isolated in any case, whether it is liquefaction or delivery into a pipe, and then recycled. Gazprom will also face the problem of “wet gas” as it develops the Neocomian-Jurassic deposits of the Bovanenkovo field in the west of Yamal.

It was supposed to solve the problem in a comprehensive manner, for this last year First Deputy Prime Minister Andrei Belousov created a working group. At the same time, from a geographical point of view, the Tambeyskaya group is located much closer to the Yuzhno-Tambeyskoye field of NOVATEK and the infrastructure of the port of Sabetta in the east of Yamal than to the infrastructure of Bovanenkovo.

In December 2020, at a meeting with the participation of Vladimir Putin in Tobolsk, the head of SIBUR, Dmitry Konov, proposed separating ethane during LNG production, since it is cheaper, and sending it in tankers to the Far East for processing. Kommersant’s interlocutors then wondered what kind of gas liquefaction was meant by Mr. Konov, because Gazprom intends to send all its gas from Yamal to the pipeline, while NOVATEK does not have significant volumes of “wet gas” at existing assets in the region. Leonid Mikhelson is the largest shareholder of SIBUR.

Then in March, the government approved a long-term LNG development program. The document refers to the sources of pipeline export all the reserves in the UGSS zone, while the gas from remote fields, including in Yamal, recommends sending it for liquefaction.

The strategy notes that the potential for LNG production based on the Tambeyskoye field is about 20 million tons of LNG per year, and the launch of the project is possible by 2030.

The volume estimate looks underestimated, given that NOVATEK built Yamal LNG with a design capacity of 16.5 million tonnes based on the Yuzhno-Tambeyskoye field with reserves of 1.3 trillion cubic meters according to the Russian classification.

The Tambeyskoye field is adjacent to NOVATEK’s Yuzhno-Tambeyskoye field, which is the resource base for Yamal LNG, emphasizes Dmitry Marinchenko from Fitch. In his opinion, it would be logical to monetize this asset precisely through the production of liquefied gas. At the same time, NOVATEK has a low debt burden, including due to the fact that the company was able to finance a significant part of investments in Arctic LNG-2 at the expense of co-investors, the analyst explains, therefore the purchase of the field is unlikely to negatively affect the company’s creditworthiness, especially if part of the the transaction will be paid in shares.

Tatiana Dyatel, Yuri Barsukov

Original source: https://rogtecmagazine.com/novatek-wants-to-buy-the-tambeyskoye-field-from-gazprom/