ASIA PACIFIC LNG

Novatek on the lookout for ice-class tankers Andrew Walker / NOVATEK IS CHARTERING additional said, I would assume the savings in transit time London ice-class LNG carriers to maintain the offtake offset the higher charter rates. Plus, Novatek and schedule at its Yamal plant in the Russian . the other partners need to move as much [LNG] as But while the company will be paying a premium possible when the sea is free of ice,” he told Interfax for the vessels, this will likely be offset by shorter Natural Gas Daily. transit times via the (NSR). The Pskov can operate in medium ice conditions Asian customers will receive their first with support, according to the NSRA, consignments of LNG from Yamal in the next but Novatek will be looking for ice-class vessels that few days. Two vessels carrying cargoes from the can operate independently in Arctic waters to avoid plant have successfully navigated the NSR and are paying for icebreaker assistance. expected to arrive in China next week. Asian spot LNG prices are being boosted Until now, Novatek has sent LNG solely to by strong demand for the fuel from China and The first LNG Europe, where cargoes are reloaded on other vessels South Korea, which means Novatek is likely to tankers to take so the ice-class carriers can return to Yamal. But the prioritise deliveries to the region between July and the Northern Sea longer journey time needed to send volumes to Asia mid-November, when there is relatively little ice. Route from Yamal has left the company short of tankers. The journey are nearing China, from Yamal to northeastern China is expected to Additional charters while Novatek is take around 22 days, significantly longer than the A new type of ice-class LNG tanker, the Arc7, securing additional 10 days it takes to travel to Zeebrugge in Belgium. has been developed specifically for Yamal, and 10 shipping to take Novatek has chartered the Pskov carrier from such vessels are on order. They are expected to be cargoes to Europe. Gazprom to maintain its offtake schedule while the delivered by early 2020, but this will not be in time two ice-class vessels are heading to China. The Pskov to meet a rise in Yamal’s exports, with its second has an Ice2-class rating under the Russian Maritime train expected to start shipments from September or Register of Shipping. This means it can operate October this year. Novatek has therefore agreed to in the southwestern between July and charter four Arc4-class LNG carriers from Dynagas November, when ice is typically light, according to to operate on the NSR from next year. the Northern Sea Route Administration (NSRA). The Arc4 vessels are able to operate in more Novatek reportedly paid $100,000 to charter challenging conditions than the Ice2-class Pskov. the Pskov, which is above the current market However, they are very different to the Arc7 vessels, rates of $65,000-76,000 per day for a similar which have been purpose-built for the Yamal modern 160,000 cubic metre vessel, according to project, according to Claude Daley, professor of information from ship broker Poten & Partners. ocean and naval architecture engineering at the Feer, head of business intelligence at Poten Memorial University of Newfoundland. & Partners, said specialist vessels will be able to Daley said ice conditions would determine command a premium within the market because whether the Arc4 vessels would be able to make The Christophe de there are so few available. They are typically built for the NSR journey for the entirety of the summer. Margerie Arc7-class specific projects and operate on long-term charters. “A late October voyage would likely be quite LNG carrier at Yamal. “You pay more for greater capability, and ice-class different than a July voyage. By October, the ice is (Novatek) vessels definitely have enhanced capabilities. That reforming and [the day is] getting dark. Icebreaker escorts sometimes helps, but not always,” he told Interfax Natural Gas Daily. It is therefore likely that the Arc7 LNG tankers will be prioritised for the use on the NSR during the summer months, with the Arc4 vessels used for transshipment to Europe as a result. The vessels that carried the first LNG cargoes through the northern route were the and the Eduard Toll, which are built specifically for operating in the ice-strewn waters of the Arctic. This leaves three purpose-built ice-class vessels – the , the Fedor Litke and the Christophe de Margerie – to load cargoes from Yamal and take them to Europe.

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Natural Gas Daily | 12 July 2018 4 ASIA PACIFIC LNG

LOCATIONS OF LNG TANKERS ON THE NORTHERN SEA ROUTE

Northern Sea Route Boris Vilkitsky Summer route (July-November)

Western Route All year round Yamal LNG Pskov Christophe de Margerie

IMO Polar Rules apply

Zeebrugge Fedor Litke Eduard Toll Vladimir Rusanov

Tianjin China Japan Jiangdu

Carrier locations as of 11am, 12 July 2018. Rosatomflot/Marine Traffic/IACS/Interfax

ICE BREAKING LNG VESSELS Vessel name Ice class Owner Date delivered Storage capacity Destination Pskov Ice2 Sovcomflot 2014 170 Mcm Yamal Christophe de Margerie Arc7 Sovcomflot November 2016 172 Mcm Yamal Boris Vilkitsky Arc7 Dynagas October 2017 172 Mcm Rotterdam Fedor Litke Arc7 Dynagas November 2017 172.6 Mcm TBD Eduard Toll Arc7 Teekay/CLNG December 2017 172 Mcm Jiangdu Vladimir Rusanov Arc7 MOL/China COSCO March 2018 172 Mcm Jiangdu

TRAVEL TIMES Origin Destination Distance Approximate time taken* Sabetta/Yamal LNG Rotterdam, Netherlands 4,584 km 6.9 days Sabetta/Yamal LNG Isle of Grain, UK 4,723 km 7.1 days Sabetta/Yamal LNG Zeebrugge, Belgium 4,936 km 7.4 days Sabetta/Yamal LNG Mugardos, Spain 5,906 km 8.9 days

Sabetta/Yamal LNG Tokyo, Japan 9,338 km 14.0 days Sabetta/Yamal LNG Incheon, South Korea 10,532 km 15.8 days Sabetta/Yamal LNG Shanghai, China 10,808 km 16.2 days Sabetta/Yamal LNG Tianjin, China 11,051 km 16.6 days *Travel time based on an average speed of 15 knots

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