Saudi Arabia looks to expand from oil to natural gas with huge LNG investment in Russia’s Arctic

Russia’s biggest independent gas producer Novatek is considering selling up to 30 percent of its Arctic LNG (liquefied natural gas) 2 project to Saudi national oil giant Saudi Aramco.

Shortly after selling a 10-percent stake in the project to France’s Total, Novatek said it is ready to consider a deal with Saudi Arabia as it hopes for cooperation on favorable terms, according to its CEO Leonid Mikhelson.

“[Saudi Aramco representatives] are considering such a stake [of up to 30 percent],” Mikhelson told reporters on Sunday, when he discussed the company’s Arctic LNG 2 project with Saudi Oil Minister Khalid al-Falih. He added that the exact terms of the deal are to be discussed in the nearest future as “productive” talks are ongoing.

The kingdom has long been eyeing investment in Russian energy projects as it wants to be “not only a huge oil company, but also have a big role on the gas market,” according to the Novatek CEO. In February, al-Falih said that Saudi Aramco wanted the Arctic LNG 2 project to be part of its gas strategy. It was earlier reported that Riyadh is ready to invest up to $5 billion in the project.

Arctic LNG 2 is Novatek’s second plant for liquefying gas on the Gydan Peninsula in Northern Siberia after it entered the global market by successfully launching the Yamal LNG project in the region. The plant is expected to be launched in 2022-2023, producing 19.8 million tons of LNG per year.

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