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BP Eyes Gas from Russia's Yamal LNG Project

Published May 22, 2013 9:57 AM by The Maritime Executive

* Yamal to produce 15 mln tonnes of LNG annually from 2018

* Aims to sell gas to Britain, Europe in winter

* Plant is intended to supply higher-priced Asian markets

(Reuters) - BP has been in discussions to secure liquefied natural gas from Russia's Yamal LNG project, which is being jointly developed by Novatek and Total, sources close to the talks told Reuters on Wednesday.

"There is interest from BP, but it's still too early to talk about any concrete agreement," one of the sources said, requesting anonymity.

The project in Russia's Arctic Yamal peninsula is slated to produce 15 million tonnes of LNG per year from 2018.

It is facing headwinds including the need to acquire rights to export gas from Russia.

Currently, only state-owned Gazprom is able to ship gas outside of the country.

The Russian authorities have signalled they may allow Novatek and other companies to sell LNG abroad, but only under certain conditions, including agreed contracts with consumers.

Novatek has said it has reached preliminary agreements to sell around 80 percent of LNG from the project.

"Among the various European and Asia companies that expressed an interest, a certain number of HOAs were signed," a second source said, referring to so-called heads of agreements, which are non-binding outline deals.

Last month, a Total official said partners in the project were in talks to ship cargoes to Britain and northwest Europe in winter.

Gazprom supplies around a quarter of Europe's gas through its export pipeline network, while the planned Yamal LNG export plant is intended to supply higher-priced Asian markets, where Russia currently sells little gas.

It is expected that exact details of how much LNG will be sold to Europe and to which specific companies and terminals will be announced in a few months.

Novatek and Total spokespersons in Moscow refused to comment. No immediate comment was available from BP in London.