President of Russia Vladimir Putin: How is work, Mr Mikhelson?
Chairman of the Management Board of NOVATEK Leonid Mikhelson: Very well, Mr President.
If you allow me, I would like to report on the progress of our LNG projects.
Vladimir Putin: Please do.
Leonid Mikhelson: LNG is central to NOVATEK’s current development strategy. In December 2017, you launched the first production line at Yamal LNG, and in December 2018, it reached full capacity of 16.5 million tonnes. As of today, a tanker is loaded every 33 hours, which amounts to 70,000 tonnes of LNG.
Vladimir Putin: So the plant is up and running.
Leonid Mikhelson: Yes, it is.
Orders worth about 650 billion rubles were placed by Russian companies, and 55 regions were involved in construction.
Vladimir Putin: Fifty-five regions?
Leonid Mikhelson: Fifty-five regions. The geographic range was very wide, including the Krasnoyarsk Territory, where there are some specialised plants. I will later elaborate on the companies involved in the launch of our next line.
It is important to note that construction of the fourth line is underway, and this line will use only Russian equipment with NOVATEK solutions. This will be a pilot line with an output of about a million tonnes. We will test it next year.
Vladimir Putin: I remember you telling me about it.
Leonid Mikhelson: In a month, we will be launching a medium-scale LNG plant in Vysotsk with a capacity of 600,000 tonnes, and mostly for bunkering purposes.
Vladimir Putin: Is this in Leningrad Region?
Leonid Mikhelson: Yes, in Leningrad Region.
The first line will be 600,000 tonnes, and next year we will probably decide on two more lines for another 1.2 million tonnes. Bunkering services are gaining momentum in the Baltic, so I think that there will be demand for these services.
The main thing is that we have started implementing our second project, Arctic LNG-2, with a capacity of 19.8 million tonnes. It involves placing over 1 trillion rubles’ worth of contracts with Russian companies.
Vladimir Putin: Do you plan to put it on stream in 2022?
Leonid Mikhelson: Yes, I will speak about the timeframe later.
We have started building a facility where we will build marine platforms. Our investments in Murmansk Region are estimated at some 120 billion rubles. We will launch the first stage of this facility in mid-2019.
There will be two docks – here are the measurements, and this is how the liquefaction train over 300 m long, 150 m wide and 70 m high will look. It will weigh 620,000 tonnes. The train will be towed by sea and stationed at the field. These trains will be factory produced.
Novatek’s strategy provides for producing 57 million tonnes of LNG by 2030. I am citing the figure now because we are confident of our ability to reach this target. Moreover, an upward revision of the figure to 70 million tonnes is possible in a year or two.
Now to the Northern Sea Route. As per your May Executive Order, under which the transportation of cargo by this route should be increased to 80 million tonnes, we expect our cargo to account for 50 percent of the total, or over 46 million tonnes.
We plan to build two reloading centres, one in Murmansk Region and the other in Kamchatka.
As for the load factor, we held two large conferences with potential producers last year. We expect that over 800 companies will take part in this project. We will create 12,000 jobs in Murmansk Region and over 80,000 jobs across Russia. According to our estimates, this will account for 0.15 percent of GDP annually over the next 10 years, which is a huge amount.
Vladimir Putin: Sounds good.