Gas Natural Fenosa Buys Long-Term LNG from Russia's Yamal

Spain's Gas Natural Fenosa said on Thursday signed a deal to buy 2.5 million tonnes per year of liquefied natural gas (LNG) from Russia's planned export terminal at Yamal.

Industry sources say the contract has a duration of 20-years.

The LNG, equivalent to roughly a tenth of Spain's total gas consumption, will be exported from an Arctic liquefaction plant currently being built by Russia's No. 2 gas producer Novatek and French major Total.

Gas will be fed to the 16.5 million tonne/year plant, scheduled to start exports in 2016, from the South-Tambeyskoye field in the Yamal Peninsula.

"The contract with Yamal LNG will become one of the most important in the Gas Natural Fenosa portfolio...In the absence of access to Russian pipeline gas, Yamal LNG gas supplies are of major importance to us," the company said in a statement.

The announcement follows a Russian government decision earlier this week to liberalize LNG exports - now the preserve of state-owned Gazprom - from the start of next year.

The Novatek-led project concluded an outline deal to supply three million tonnes of LNG per year to China National Petroleum Corp. (CNPC) last week.

The deal with CNPC, which recently bought a 20 percent stake in Yamal LNG, covers a period of 15 years, with pricing linked to the so-called Japanese crude cocktail - a benchmark based on oil prices.

Gas Natural Fenosa did not specify the duration of its deal with Yamal LNG nor the mechanism used to price the fuel.

Copyright Reuters 2013.