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NewBase Energy News 13 September 2022 No. 1547 Senior Editor Eng. Khaed Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
U.A.E: Abu Dhabi's Mubadala and Taqa to invest in
privatisation of 2 Uzbekistan power plants
The National + NewBase
Mubadala Investment Company and the Abu Dhabi National Energy Company, better known
as Taqa, have signed agreements to invest in the privatisation of two gas-fired power plants in
Uzbekistan.
Mubadala and Taqa will each acquire a 40 per cent stake in the power stations with a combined
capacity of 1.6 gigawatts, and take over the associated operations and maintenance activities,
the Abu Dhabi entities said on Friday.
They did not disclose the value of the deal.
UAE Minister of Energy and Infrastructure Suhail Al Mazrouei, second from left, witnessed the
signing of the agreements between Mubadala, Taqa and Uzbekistan. Photo: Taqa

Uzbekistan's Talimarjan Issiqlik Elektr Stansiyasi will retain the remaining 20 per cent stake in
each plant. The transaction is subject regulatory approvals and is expected to be completed in
the second half of 2023.
The agreements were signed by Mubadala's chief executive for real estate and infrastructure
Khaled Al Qubaisi, Taqa's group chief executive and managing director Jasim Thabet,
Uzbekistan's Deputy Prime Minister Jamshid Khodjaev and Talimarjan's general director
Yusupov Olim.
The signing ceremony was held in the presence of Suhail Al Mazrouei, UAE Minister of Energy
and Infrastructure.
"The strategic partnership between the government of Uzbekistan, Taqa and Mubadala will serve
as a vehicle for collaboration for both countries and will create a path for future growth and
investment opportunities," Mr Al Mazrouei said.
Uzbekistan is moving forward to improve its energy and power generation sectors, harnessing
its natural resources and seeking investments from overseas.
In 2019, the Central Asian nation embarked on a multi-phase transition from a state-owned and
subsidised energy sector to a competitive gas, oil and electricity market with significant private
sector participation, a move that is expected to provide huge economic benefits, according to the
International Energy Agency.
Uzbekistan also unveiled plans to raise the share of renewable energy in total electricity supply
to 25 per cent by 2030, from 10 per cent in 2020. The investments by the Abu Dhabi companies
are expected to help Uzbekistan to realise its energy goals.
Mr Al Qubaisi said Mubadala was focused on supporting the energy transition around the world.
"We are confident our partnership will contribute to Uzbekistan’s greater energy stability while
preparing for a low carbon future," he said. Friday's announcement comes after Mubadala's
2020 agreement with Uzbekistan’s Ministry of Investment and Foreign Trade and JSC Thermal
Power Plants to privatise and develop the country’s Talimarjan Power Complex.
The agreement is also part of Taqa's 2030 growth strategy. The utility last year announced plans
to invest Dh40 billion ($10.9bn) in infrastructure development as it looks to add about 27
gigawatts of power capacity by the end of the decade and expand its renewables portfolio.

"Investment alongside Mubadala in these power plants means we will become a major generator
in Uzbekistan. The deal also significantly expands our operation and maintenance activity,
another key part of our strategy, said Farid Al Awlaqi, executive director of generation at the Taqa
Group.
Mubadala, whose oil and gas unit was rebranded to Mubadala Energy this week, continues to
build up its portfolio in foreign markets. Its $284bn portfolio spans six continents with interests in
numerous sectors and asset classes.
Taqa has significant investments in power
and water generation and transmission
and distribution assets, as well as
upstream and midstream oil and gas
operations. In July, it said it was retaining
the vast majority of its oil and natural gas
assets after a strategic review that took
about a year.
Meanwhile, Abu Dhabi is continuing to
expand its overseas energy investments.
At this week's Gastech Milan, the
emirate's Department of
Energy showcased hydrogen, natural
gas and low-carbon energy solutions at the
major global energy conference.

Global oil and gas exploration shrinks as companies shift focus to
lower-risk core assets and regions - Rystad Energy
Global oil and gas exploration is set to falter this year as the number of licensed blocks and total
acreage fall to near all-time lows as the sector struggles to shake off the effects of the Covid-19
pandemic and the ensuing oil market crash, Rystad Energy research shows.
Only 21 lease rounds were completed globally through August this year, half of the 42 rounds held
in the first eight months of 2021. The acreage awarded so far this year has shrunk to a 20-year low
of 320,000 square kilometers. Global lease rounds are expected to total 44 this year, 14 less than
in 2021 and the lowest level since 2000.
Global spending on exploration has been falling in recent years as oil and gas companies seek to
limit risk by focusing on core producing assets and regions with guaranteed output, aiming to
streamline their operations and build a more resilient business amid market uncertainty and the
threat of a recession.
The political landscape is also contributing to the decrease in license awards, with many
governments pausing or halting leases and encouraging companies to wrap up exploration activity
within already awarded blocks. This trend is likely to continue as governments are less eager to
invest in fossil fuel production and instead look ahead to a net zero future.
“Global exploration activity has been on a downward trend in recent years, even before the Covid-
19 pandemic and oil market crash, and that looks set to continue this year and beyond. It is clear
that oil and gas companies are unwilling to take on the increased risk associated with new
exploration or exploration in environmentally or politically sensitive areas,' says Aatisha Mahajan,
vice president of analysis, Rystad Energy.

Learn more in Rystad Energy’s Upstream Solution.
The onshore exploration sector is a significant contributor to the decline in awarded acreage. Total
onshore acreage awarded in leasing activity has plummeted from more than 560,000 square
kilometers in 2019 to a mere 115,000 square kilometers so far this year. Offshore leased acreage
also hit a high point in 2019 before dropping off a cliff in 2020 and has remained relatively flat in the
past two years.
Concluded lease rounds have dropped significantly in Russia, the US and Australia this year. These
countries have held five lease rounds put together so far this year – three in Russia and one each
in the US and Australia – down from 17 rounds in the first eight months of 2021 (eight in Russia,
five in the US and four in Australia). The drop in the US is primarily driven by the cancellation of
Lease Sales 259 and 261 in the Gulf of Mexico and Cook Inlet in Alaska.
Asian licensing has bucked the trend with increased activity and blocks awarded in Malaysia,
Indonesia, India and Pakistan. The global decline in licensing rounds has directly affected the
awarded acreage, which has hit an all-time low for the January to August period of about 320,000
square kilometers.
The decline in leasing activity has resulted in a considerable drop in Russian acreage awards, falling
90% from a year ago to 9,000 square kilometers, while licensed acreage in Africa shrank 70% to
just 46,000 square kilometers spread across Angola, Egypt, Morocco and Zimbabwe, the only
African countries to award new exploration acreage to date in 2022. On the other hand, new acreage
awarded in Asia between January and August nearly quadrupled from the same period last year,
while South American awarded acreage surged by 140%.

Drilling into the awards
Brazil is the largest contributor in terms of blocks awarded so far this year, with 59 auctioned during
its Third Permanent Offer Round. European majors Shell and TotalEnergies took all eight offshore
blocks on offer – six and two, respectively.
The remaining 51 onshore blocks in the Tucano, Espirito Santo, Potiguar, Reconcavo and Sergipe
Alagoas basins went to regional players 3R Petroleum (six blocks), NTF (two), Petro Victory Energy
(19), Origem Energia (18), Imetame Energia (three), Petroborn Oleo (two) and CE Engenharia
(one).
Other sizeable block awards after Brazil were Norway with 54 new licenses in its APA 2021 round,
India with 29 blocks its OLAP Rounds 6 & 7, and Kazakhstan’s fourth oil and gas auction round, in
which 11 blocks were awarded.
There was also some sporadic activity in Africa between January and August, with Egypt providing
rights to explore in nine blocks and Angola granting two blocks. South America also saw an offshore
licensing round in Uruguay, where three exploration blocks were awarded – blocks OFF-2 and OFF-
7 to Shell and Block OFF-6 to US independent APA.
Challenger Energy signed a 30-year license for OFF-1 through direct negotiation with the
government.
For more analysis, insights and reports, clients and non-clients can apply for access to Rystad
Energy’s Free Solutions and get a taste of our data and analytics universe.

Oman: Maha Energy Drilling oil Block 70 – Mafraq oil discovery
NewBase + Oman Observer
Swedish energy firm Maha Energy AB announced this week the start of drilling operations targeting
hydrocarbons in the Mafraq field in Block 70 in central Oman. The latest well - the first of six new
wells planned to be drilled in the Block - was spudded on Tuesday, five weeks ahead of schedule,
the company said in a press statement.
Maha Energy was successful in
securing Block 70, which contains the
Mafraq heavy oil discovery, in a 2019
- 2020 government bid round. The
Mafraq structure is a delineated
heavy oil field that was extensively
tested by Petroleum Development
Oman (PDO) in 1988 and 1991. The
field tested 15,700 barrels of 13° API
oil over a period of 24 days using a
Progressive Cavity Pump (PCP) from
a single well.
Commenting on its drilling
programme, Maha Energy explained:
"Plans are well developed to
commence drilling on the Block. At
the moment a total of six wells will be
drilled. First, four horizontal
production test wells will be drilled
and placed on long term test production. Two appraisal wells will then be drilled to (a) identify the
oil water contact on the structure, and (b) determine fracture orientation at various levels of the field.
If results are deemed positive, the Company has secured sufficient equipment and services to
immediately drill additional wells to add to the long term well test production volumes."
Gulf Drilling Rig 109 has been deployed for the drilling programme, according to the company. In
addition to the spudding of Mafraq-7, a total of four drilling pads and 18 kilometres of roads have
been refurbished and/or constructed on Block 70. Work is proceeding to negotiate temporary offtake
agreements for the extended well test produced crude oil, it further stated.
Last month, Maha Energy announced that it had entered into an agreement with Mafraq Energy
LLC for Maha to reduce the participating Interest in the Block 70 Exploration and Production Sharing
Agreement (EPSA) from 100 per cent to 65 per cent. Maha will continue to be the Operator of the
Block. The agreement is subject to government approval in Oman.
Maha Energy AB enters into a Farmout Agreement with Mafraq Energy LLC for Block 70 in Oman
Maha Energy AB (publ) (“Maha” or the “Company”), through its wholly owned subsidiary Maha
Energy (Oman) Ltd., has entered into an Agreement with Mafraq Energy LLC for Maha to reduce
the Participating Interest in the Block 70 Exploration and Production Sharing Agreement (“EPSA”)
in Oman from 100% to 65%.
Maha will continue to be the Operator of the Block. The Agreement is subject to Government
approval in Oman.

Maha has decided to reduce its working interest in the onshore oil-bearing Block 70 in Oman by
bringing in a strategic Omani partner. The Agreement requires Mafraq Energy LLC to reimburse
Maha for their prorated share of all past costs including the signature bonus. Mafraq Energy LLC
will also be required to pay their share of all future expenditures on Block 70.
Jonas Lindvall, Maha’s CEO said: “We are delighted to have Mafraq Energy LLC join us on Block
70. Mafraq Energy LLC brings extensive experience of the Mafraq field and the surrounding areas
in Oman. The fact that Mafraq Energy joins us is perhaps the best evidence yet of the future potential
of the Mafraq field.”
Talal Al Subhi, Director of Mafraq Energy LLC said: “We are pleased and honoured to join Maha
Energy to commercialize Oman’s national resources. The farm out arrangement is also completely
aligned with the realisation of the Oman national 2040 vision’s “Growing the Private Sector”, and
we are proud to be doing our part.”
Immediate plans for the Mafraq oil field include drilling six wells to obtain important reservoir
information to assist in developing a full Field Development Plan. The Gulf Drilling rig 109 was
recently contracted for this drilling. Anticipated mobilisation of the drilling rig is scheduled for
October this year.
About Mafraq Energy LLC
Mafraq Energy LLC is a private Omani company whose founders come with an extensive track
record in multiple business sectors. Sister Companies to Mafraq Energy LLC are active in the
upstream oil and gas service sector, the downstream distribution and service sector, as well as
manufacturing capabilities in the telecommunication service sectors.
About the Mafraq field
Maha was successful in securing Block 70, which contains the Mafraq heavy oil discovery, in a 2019
– 2020 Government bid round. The Mafraq structure is a delineated heavy oil field that was
extensively tested by Petroleum Development Oman (PDO) in 1988 and 1991.

The field tested 15,700 barrels of 13° API oil over a period of 24 days using a Progressive Cavity
Pump (PCP) from a single well. The test well, MF-5, tested 100% oil for less than a day after which
water production stabilized at around 25%.
It is unknown why PDO did not develop the field at the time, but it is likely that prevailing commodity
prices (US$ 18 – US$ 20 per barrel) and access to other lower cost opportunities precluded Mafraq
as a development option at the time.
According to the independent reserve auditor, Chapman Petroleum Engineering Ltd. of Calgary,
Canada, the Mafraq field may hold approximately 35 million barrels of recoverable oil (2C + 2P as
at 31 December 2021).
Following farmout approval by the Government of Oman, Maha’s share of its contingent resources
will be reduced proportionally by 35%. The field oil-water contact has not been penetrated yet which
renders possible further upside to these volumes. The Mafraq structure is an East-West fault
bounded anticline with the productive interval being at +/- 430 meters below the ground level. The
oil flows freely in the reservoir at 51° C and is expected to cold flow to surface in commercial
quantities.
About Maha
Maha Energy AB (publ) is a listed, international upstream oil and gas company whose business
activities include exploration, development and production of crude oil and natural gas. The strategy
is to target and develop underperforming hydrocarbon assets on global basis.
Maha operates four oil fields: Tartaruga and Tie in Brazil, Powder
River (LAK Ranch) and Illinois Basin in the United States. The
shares are listed on Nasdaq Stockholm (MAHA-A). The head office
is in Stockholm, Sweden with a technical office in Calgary, Canada,
as well as operations offices in Grayville, Illinois, USA and Rio De
Janeiro, Brazil. For more information, please visit our
website www.mahaenergy.ca

India mulls boosting coal imports – energy minister
NewBase + Bloomberg
India may increase coal imports due to supply concerns, despite a longer-term policy to curb
purchases from overseas, the country’s power and renewable energy minister, Raj Kumar Singh
told Bloomberg on Friday. “We are watching the situation anxiously. Availability of power for the
common man is non-negotiable,” he was cited as saying.
About 75% of India’s electricity is coal-powered. According to the report, coal stockpiles have
dropped about 11% since mid-August, and this leaves utilities with an average of ten days supply
while the required levels are more than three weeks. According to Kumar Singh, power plants were
urged to maintain adequate stockpiles and import coal if they were close to running out.
India brought in over 25 million tons of coal in June alone, a record amount and over a third more
than it did in the same period last year, Reuters reported last month citing data from consultancies
Coalmint and Kpler.
Thermal coal imports jumped 40%, while imports of coking coal rose 23% year-on-year, according
to data from India-based trader I-Energy. Overall, coal imports in the January-June period were
119.5 million tons, just 0.6% lower than in the same period in pre-pandemic 2019.
State-run Coal India issued a first-ever import tender in June to ship in at least 12 million tons of the
fossil fuel over the next twelve months to curb shortages at utilities. India’s power major NTPC also
increased purchases from seaborne markets, Bloomberg reported.
Stockpiles at the country’s power
plants have dropped some 11% since
mid-August, causing supply concerns

According to a recent report by the Economic Times, Indian companies have been importing
significant volumes of petroleum coke from Venezuela, a byproduct from oil upgrading and an
alternative to coal, having bought at least four cargoes carrying 160,000 tons of the fuel from April
to June.
Analysts believe India is taking these measures to avoid repeating the 2021 coal crisis, when the
country’s power supply was jeopardized by the monsoon season which saw coal mines flooded and
shipments disrupted.
India Asks Coal Plants to Run Flat Out to Ease Power Crisis
India’s government ordered coal-fired power plants that run on imported fuel to operate at full
capacity to address an escalating energy crisis that’s threatening economic growth.
The government took the unusual step of invoking a little-used provision in electricity laws to bridge
a supply deficit that’s causing widespread blackouts. The order is valid until Oct. 31, the power
ministry said in a letter posted on its website.
A motorcyclist drives past chimneys and a cooling tower at a coal-fired power plant in the outskirts
of Visakhapatnam, Andhra Pradesh, India.
India is facing a crisis as power demand surges amid a blistering summer. Production of coal, the
fossil fuel that accounts for more than 70% of electricity generation, has failed to keep pace, and
the energy system is expected to come under further strain as demand tops a recent record in the
coming weeks.
Government invokes rare provisions amid widespread blackouts
Decision impacts power producers using expensive imported coal

That situation has been made worse as global coal prices have surged on tight supply, prompting
power plants using imported fuel to operate at reduced capacity to limit losses. Asia’s benchmark
Newcastle coal futures have advanced more than 145% this year.
Of the 17.6 gigawatts of India’s power generation capacity that’s designed to use imported coal, just
10 gigawatts is currently operating, the power ministry said. Most of the plants have contracts with
buyers that do not allow them to pass along rising fuel costs, it said.
JSW Energy Ltd., which runs two such plants, said producing electricity with imported coal has
become expensive. Lower generation from these plants coupled with the soaring temperatures are
contributing to power shortages, Chief Executive Officer Prashant Jain said in an interview on
Bloomberg Television.
Boosting power generation from the curbed plants will help to meet some of the shortfall in the
nation’s electricity supply, but won’t alone solve the current problems.
Over the long-term India will aim to end the use of imported coal for power plants, Coal Minister
Pralhad Joshi said Friday. There will also be immediate efforts to revive production from abandoned
mines, and officials are preparing for the impact of the monsoon season from around June, when
heavy rains can limit coal production, he said.
Powers under section 11 of the country’s electricity laws allow the government to force any power
station to operate as directed in extraordinary circumstances, such as a natural calamity or a threat
to national security or public order.
The ministry will take steps to ease the burden of high imported coal prices on the plants, according
to the letter.
Electricity buyers will need to agree a mutually negotiated price for supply with power producers, or
accept benchmark rates under a formula being devised by officials from the ministry, Central
Electricity Authority and the Central Electricity Regulatory Commission, the letter said.

NewBase September 12 -2022 Khaled Al Awadi
NewBase for discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
Oil prices slide as China COVID curbs, possible rate hikes weigh on demand outlook
Reuters + NewBase
Oil prices slipped during Asian trade on Monday as the prospect of further interest rate hikes in the
United States and Europe to quell inflation and the imposition of strict COVID-19 restrictions in
China overshadowed the global demand outlook.
Brent crude futures dropped $ 1.3, or 1.4%, to $91.54 a barrel by 3.50 GMT, after settling 4.1%
higher on Friday. U.S. West Texas Intermediate crude was at $85.52 a barrel, down $1.27 , or 1.46
%, after a 3.9% gain in the previous session.
Prices were little changed last week as gains from a nominal supply cut by the Organization of the
Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, were
offset by ongoing lockdowns in China, the world's top crude importer.
Oil price special
coverage

China's oil demand could contract for the first time in two decades this year as Beijing's zero-COVID
policy keeps people at home during holidays and reduces fuel consumption.
"Demand concerns centred on the impact of rising interest rates to combat inflation and China's
COVID-zero policy," Commonwealth Bank of Australia analyst Vivek Dhar wrote in a note.
The European Central Bank and the Federal Reserve are prepared to increase interest rates further
to tackle inflation, which could lift the value of U.S. dollar against currencies and make dollar-
denominated oil more expensive for investors.
Still, global oil prices may rebound towards the end of the year - supply is expected to tighten further
when a European Union embargo on Russian oil take effect on Dec. 5.
The G7 will implement a price cap on Russian oil to limit Russia's lucrative oil export revenue
following its invasion of Ukraine in February, and plans to take measures to ensure that the oil could
still flow to emerging nations. Moscow calls its actions in Ukraine "a special operation".

NewBase Specual Coverage
The Energy world –September -01 -2022
CLEAN ENERGY
Russian LNG Aims High, Leveraging Big Reserves
and Logistical Advantages
By Pat Davis Szymczak - Journal of Petroleum Technology
Russia is pouring investment into liquefied natural gas projects as it seeks to leverage the
world’s largest natural gas reserves together with the logistical advantages of delivering it
at a competitive price to Asia and Europe along the now-navigable Northern Sea Route.
Yamal LNG, which shipped its first cargo in December 2017, has been operating in excess of its
110% nameplate capacity and has shipped 700 cargos so far.
Russia’s market influence as an exporter of liquefied natural gas (LNG) is growing, possessing the
world’s largest reserves of natural gas and the logistical options to deliver it at competitive prices to
Asia and Europe along the now-navigable Northern Sea Route (NSR).
The country became a player in the LNG market when it shipped its first cargo in 2009 to Japan
from what was then Russia’s first offshore gas project, Sakhalin-2 in the Far East, operated by
Sakhalin Energy Investment Company Ltd. and owned by Russia’s pipeline gas monopoly Gazprom
(50% plus one share), Shell (27.5% minus one share), and Japan’s Mitsui (12.5%) and Mitsubishi (10%).

Sakhalin Energy operates three oil and gas platforms producing its current resource base from the
Piltun-Astokhskoye oil field and the Lunskoye gas field off the northeastern coast of Sakhalin.
To date, Sakhalin Energy has sold all the LNG produced at its 11.49-mtpa-capacity Prigorodnoye
LNG production complex on the southern tip of Sakhalin Island, under long-term contracts to buyers
in the Asia Pacific and North America, according to Shell’s website.
In 2024–2026, the partners say they will add a third train to expand capacity by 5.4 mtpa, though
they have repeatedly delayed this expansion for years due to a lack of investment capital to develop
a new resource base and low gas prices in Asia. The same holds true for Gazprom’s plan for an
LNG plant near Vladivostok.
However, the market has now changed with rising demand for gas to replace coal, giving gas
producers an incentive to invest into new E&P gas projects and mid-to-downstream megaprojects
like those for producing LNG.
In 2018 and again this past January, European spot gas prices spiked on Gasunie’s leading TTF
(title transfer facility) virtual trading platform and other European trading hubs when Asian gas
markets began offering high premiums to divert LNG cargos from Europe, according to the EU
Commission’s latest European Gas Market report.
The Rise of a Russian IOC—Novatek in Yamal
Russia’s largest independent natural gas producer Novatek was Russia’s second entrant into the
LNG market when its Yamal LNG project rose above the permafrost atop an estimated 65,000 piles
on the Yamal Peninsula, home to Russia’s largest gas deposits and the source of Russian pipeline
gas sold into Europe.
Yamal LNG shipped its first cargo (170000 m3) in December 2017.
It then upped the ante with exports from a second train in August 2018, and added a third train in
November 2018, according to Novatek’s website. Situated on the South Tambeyskoye field on the
coast of Ob Bay, the plant boasts a capacity of 17.4 mtpa.
Yamal LNG’s partners in the northwest Siberian project include Novatek (50.1%), TotalEnergies
(20%), CNPC (20%), and the Silk Road Fund (9.9%).
BP’s 2020 Statistical Review of World Energy shines a spotlight on Russia’s rapid climb up the LNG
learning curve that coincided with Novatek’s entrance into the market.
Russia’s LNG exports jumped 38% to 24.9 Bcm of gas in 2018 when compared to the 15.4 Bcm it
exported in 2017, reflecting the impact of Yamal LNG having commissioned its first three trains. In
2019, Russian LNG exports jumped again, by 36% to 39.1 Bcm of gas for the year, according to
the BP report.
In 2020, Russia’s LNG exports hit 40.4 Bcm of gas, a nearly threefold increase since 2010.
To put this in perspective, with Sakhalin-2 as its only player in the game, Russia exported 13.5 Bcm
of gas as LNG in 2010, inching up to only 15.4 Bcm by 2017. But when Yamal LNG went onstream
a year later with a capacity 33% higher than Sakhalin-2, the numbers changed radically.
With its aim to grow its LNG business to 70 mtpa by 2030, Novatek is fast-tracking expansion plans
to nearly quadruple capacity, Mark Gyetvay, deputy chairman of the company’s management board,
said in a recent podcast interview with Natural Gas World (NGW).

Yamal LNG has been operating in excess of its 110% nameplate capacity and has shipped 700
cargos so far, after having passed the 500-cargo mark in record time, Gyetvay said.
He outlined the following steps the company is taking to reach its goal:
 Launch production at Novatek’s $21 billion Arctic LNG-2 facility in 2023 and reach full
capacity of 19.8 mtpa (three trains at 6.6 mtpa each) by 2026. Arctic LNG-2 is being
constructed on the Gydan Peninsula across Ob Bay from Yamal LNG on the Yamal
Peninsula (Fig. 1).
 Continue exploration drilling and running of 3D seismic to define the resource base for Arctic
LNG-1, followed by negotiation of farmouts with potential partners. Arctic LNG-1 and Arctic
LNG-3 (which is in an even earlier exploration phase) will each have a capacity of 19.8 mtpa.
 Testing over 12 to 18 months of Novatek’s proprietary “Arctic Cascade” liquefication
technology at a 0.9 mtpa fourth train commissioned in January at Yamal LNG. The process
uses ambient Arctic temperatures as part of the liquefaction process to lower energy
consumption and capital costs.
 Fabrication of gravity-based structures (GBS) to support the installation of trains and other
relevant facilities above the permafrost. GBS is preferred over traditional piles for their
smaller footprint. Houston-based EPCI service provider McDermott International announced
that its Chinese joint venture Qingdao McDermott Wuchuan Offshore Engineering won the
contract to provide three GBS modules for Arctic LNG-2 by mid 2022.
 With work on Arctic LNG-2 well under way, Novatek will make a final investment decision
(FID) on Arctic LNG-1 in 2023 or 2024, with construction expected to start in 2026 or 2027;
Arctic LNG-3 will see construction in the 2030s, Gyetvay noted in the podcast.

Fig. 1—Novatek’s Yamal LNG project and its new Arctic LNG facilities are situated on opposite
shores of Ob Bay with access to the Kara Sea and shipping lanes that can carry LNG cargos west
to Europe and east to China year round. Source: Novatek.
Novatek is also raising $100 billion in third-party finance by pledging its 60% stake Arctic LNG-2 as
collateral, a move that has quickly attracted pledges from banks and financial institutions in
Germany, France, China, Japan, Italy, and Russia.
Novatek’s partners in Arctic LNG-2 hold a 40% stake split equally among France’s TotalEnergies,
the China National Petroleum Corporation, China’s CNOOC, and the Japan Arctic LNG consortium,
made up of Mitsui & Co. and state-owned JOGMEC, formally known as Japan Oil, Gas, and Metals
National Corp.
12-Month Arctic Sea Shipping Opens New Options
Nature meanwhile has been the biggest game changer to boost Russia’s position as an LNG
supplier. In January 2021, the Russian Arctic-class LNG carrier Christophe de Margerie completed
the first-ever round trip along the NSR from the Kara Sea to China, proving that year-round
navigation is possible.
So far, Europe has been the principal buyer of Russian LNG from the Yamal Peninsula, while Japan
is the primary destination of Sakhalin-2 LNG in the Far East (with some cargos going to South Korea
and North America) (Figs. 2 and 3).
Fig. 2—The chart at left shows how Russian LNG exports to Europe have risen since 2018. At right,
Japan’s imports from Russia reflect Sakhalin-2 volumes. Source: BP Statistical Review of World
Energy 2020.

Fig. 3—The major suppliers to China and to South Korea, two markets that could potentially buy
Russian gas in the future from Yamal as well as from planned new projects in the Russian Far East.
Source: BP Statistical Review of World Energy 2020.
Now however, year-round shipping along Russia’s Arctic Sea coast puts China in reach and makes
LNG from northwest Siberia more competitive on price with cargos from Qatar, Australia, and
Indonesia in the Asia Pacific.
Vessels carrying LNG from Yamal along the NSR reach Asia in 15 days via the Bering Strait, half
the time the journey would take via the Suez Canal, according to TotalEnergies. In June, the
company bought a 10% stake in the Novatek subsidiary Arctic Transshipment LLC which is
developing transshipment hubs in Murmansk for westbound transit and Kamchatka for eastbound
transit (Fig. 4).

Fig. 4—Red circles show transit time for LNG cargos to reach China, comparing the NSR via the
Bering Strait with shipment through the Suez Canal. Twenty-six days represents transit time from
the Gulf of Mexico through the Panama Canal. Source: Novatek interpretation of IHS Markit data
(June 2020 investor presentation).
Initially, both terminals will be equipped with a 360000 m3 floating storage unit (FSU) and two ship-
to-ship transfer kits (STS) for providing export logistics services, TotalEnergies noted on its website.
This will enable Arc7 ice-class LNG carriers to transport cargos through Arctic Ocean ice and then
offload onto conventional LNG carriers which will carry the LNG further to its destination. Limiting
the use of Arc7 ice-class LNG carriers optimizes logistics, cuts cost, and reduces CO2 emissions,
TotalEnergies said.
Russia and the US Wage a Gas War in Europe
The EU is the world’s third-largest LNG market, though its imports amounted to only about half that
of Japan (36 Bcm) and China (32 Bcm) in Q1 2021, according to the EU Commission’s latest
Quarterly Report on European Gas Markets.
In Europe, Russia competes head on with the US which emerged as the EU’s top LNG supplier in
Q4 2019 when competition between the two former Cold War rivals became heated and imports
from Qatar tumbled to third place.
Also, because Europe is the world’s-largest gas market with active gas-on-gas competition between
pipeline gas imports and LNG, it is likely that Gazprom’s influence in Europe’s energy mix may start
to diminish over time.
In the future, Europe may still import mostly Russian gas molecules, but they could just as likely
come from LNG produced by Novatek or state oil company Rosneft as they could from pipeline gas

from Gazprom, considering Gazprom’s monopoly stems from its control of Russia’s gas export
pipeline system.
It is worth noting that the US can be expected to strongly defend its position as Europe’s top LNG
supplier, given that the logistics of shipping US LNG to Europe are likely to yield more profitable
sales there, compared to sales to Asia (Fig. 4).
LNG opens the door to other Russian companies besides Gazprom to sell their gas for export, a
fact that has not been lost on Russia’s other energy behemoth, Rosneft, which has long sought an
opportunity to export its gas.
In March, Rosneft announced it would shed underperforming brownfield assets to raise capital to
transform itself into an LNG player.
Several months earlier, Rosneft CEO Igor Sechin had articulated his company’s vision to produce
LNG in 6 to 8 years using gas from its Vostok field on the Kara Sea coast, not far from Novatek’s
operations.
BP acquired a 19.75% stake in Rosneft in 2013 when it sold its 50% interest in the TNK-BP joint
venture to the Russian major. BP holds two seats on Rosneft's board of directors and in 2017, the
companies signed a memorandum of understanding to establish a "strategic gas partnership" to
develop joint gas projects in and outside of Russia, including those in LNG, according to BP's
website.
In the Far East, Rosneft is working with ExxonMobil, its partner in Sakhalin-1, to make real their
long-anticipated Russia Far East LNG (RFE LNG) project to monetize gas from the Sakhalin-1 PSA.
Sakhalin-1 co-ventures have awarded the front-end engineering and design (FEED) contract to
Houston’s TechnipFMC, according to ExxonMobil’s website.

Exxon Neftegas Limited (ENL) operates Sakhalin-1 and holds a 30% stake in association with
Japan’s SODECO Consortium (30%), India’s ONGC Videsh (20%) and two Rosneft affiliates, RN-
Astra (8.5%) and Sakhalinmorneftegaz-Shelf (11.5%).
The proposed RFE LNG project envisions a 6.2-mtpa LNG plant to be sited near Sakhalin-1’s
existing De-Kastri oil export terminal in Khabarovsk Krai on the Russian mainland. ExxonMobil’s
site notes that a final investment decision will be made “in due course.”
Gas: Transition Fuel or Critical to Energy Mix?
BP’s World Energy 2020 noted that even though the pandemic caused demand for gas to decline
in absolute terms in 2020, the share of gas in the primary energy mix has continued to rise, reaching
a record high of 24.7% globally.
In its LNG Outlook 2021,
Shell noted that China and
India led the post-pandemic
recovery in demand for
LNG, each increasing their
imports by 11%. Forecasts
expect global LNG demand
to reach 700 mtpa by 2040,
as demand for gas grows in
Asia and becomes a fuel of
choice in some hard-to-
electrify sectors, according
to the same report.
As a result, the report
concluded, LNG suppliers
will be investing more to
ensure there is no shortage
of supply as demand
continues to rise, a situation that could occur as early as the mid-2020s.
Proponents of green energy, particularly in Europe, have argued that gas is a transition fuel that will
be phased out of the energy mix gradually and replaced by renewables—but not all in the energy
industry agree.
“Novatek’s pathway forward to decarbonization is to sell more gas, not less,” Novatek’s Gyetvey
said in his interview, predicting that gas will account for up to 28% of any future energy mix, with
renewables and hydrogen also playing a part.
“But to say that no new investments are needed [in fossil fuels] post-2021 … you’ll see by the end
of this year. You’ll see the IOCs, you’ll see Novatek, you’ll see other Russian oil and gas companies
come out with their Capex programs,” he said, “and it’s going to show how totally ridiculous this
comment [on investment] had been.”
Pat Davis Szymczak
Pat Davis Szymczak has covered oil and gas for 30 years, much of that out of the Eastern
Hemisphere. She founded Oil & Gas Eurasia and previously worked for Argus Media, the
commodity magazine Futures, the Chicago Tribune, and the St. Louis Globe-Democrat. She
holds an MA in journalism from the University of Illinois and a BA in international relations from
Knox College. She can be reached at pszymczak@spe.org.

NewBase Energy News 12 September 2022 - Issue No. 1547 call on +971504822502, UAE
The Editor:” Khaled Al Awadi” Your partner in Energy Services
NewBase energy news is produced Twice a week and sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscriptions, please email us.
About: Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
www.linkedin.com/in/khaled-al-awadi-38b995b
Mobile: +971504822502
khdmohd@hawkenergy.net or khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with over 30 years of experience in the Oil & Gas
sector. Has Mechanical Engineering BSc. & MSc. Degrees from leading U.S.
Universities. Currently working as self leading external Energy consultant for the GCC
area via many leading Energy Services companies. Khaled is the Founder of the
NewBase Energy news articles issues, Khaled is an international consultant, advisor,
ecopreneur and journalist with expertise in Gas & Oil pipeline Networks, waste
management, waste-to-energy, renewable energy, environment protection and
sustainable development. His geographical areas of focus include Middle East, Africa
and Asia. Khaled has successfully accomplished a wide range of projects in the areas
of Gas & Oil with extensive works on Gas Pipeline Network Facilities & gas compressor
stations. Executed projects in the designing & constructing of gas pipelines, gas
metering & regulating stations and in the engineering of gas/oil supply routes. Has drafted
& finalized many contracts/agreements in products sale, transportation, operation & maintenance
agreements. Along with many MOUs & JVs for organizations & governments authorities. Currently dealing
for biomass energy, biogas, waste-to-energy, recycling and waste management. He has participated in
numerous conferences and workshops as chairman, session chair, keynote speaker and panelist. Khaled is
the Editor-in-Chief of NewBase Energy News and is a professional environmental writer with over 1400
popular articles to his credit. He is proactively engaged in creating mass awareness on renewable energy,
waste management, plant Automation IA and environmental sustainability in different parts of the world.
Khaled has become a reference for many of the Oil & Gas Conferences and for many Energy program
broadcasted internationally, via GCC leading satellite Channels. Khaled can be reached at any time, see
contact details above.

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