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France is extending the state guarantees for the Russian liquefied natural gas (LNG) projects Yamal LNG and the Arctic LNG 2 projects, Russian media quoted France’s Economy Minister Bruno Le Maire as saying after a meeting with his Russian counterpart Maxim Oreshkin in Paris.
According to Le Maire, France will also provide longer terms for loan repayment for the two Russian LNG projects, in which French oil and gas major Total has stakes.
“I confirm that we made a decision to give longer terms for repayment of loans, as for the state guarantees - this is a guarantee of the French state to the Yamal (LNG) project. All participants in this project requested it,” Russia’s TASS news agency quoted Le Maire as saying on Monday.
“This is a success and an economic signal, but behind there is a political signal that we want to strengthen our cooperation in the energy sector based on the Yamal (LNG) project. The same goes to the Arctic LNG-2 project - it is very important for us that the largest number of French companies could take part in it.”
Total holds 20 percent in the Yamal LNG project led by Russia’s Novatek and also participated by Chinese CNPC and Silk Road Fund. Yamal LNG started operations at the end of last year. Operator Novatek said earlier this month that Yamal LNG had reached full capacity at the plant’s three LNG trains.
In May this year, Total expanded its partnership with Novatek with the proposed Arctic 2 LNG project. Total and Novatek signed an agreement under which Total would buy a direct working 10-percent stake in Arctic LNG 2 on the Gydan Peninsula in the north of Siberia.
“Arctic LNG 2 will contribute to our strategy of growth in LNG by developing competitive projects based on giant low costs resources,” Patrick Pouyanné, Chairman and CEO of Total, said at the time.
The final investment decision for Arctic LNG 2 is expected next year, with first train start up potentially in 2023.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
And since both Russia and Iran are under US sanctions, this begs the question as to why Total has not continued its participation in the Iranian South Pars gas field which is shared with Qatar and which is the world’s largest offshore natural gas field and has not accepted the French State’s guarantees as it did with its Russian-participated gas projects. It was a cowardly act on the part of Total to withdraw from Iran under threat of US sanctions.
Moreover, France’s guarantees to total and its extension of repayment terms for two Russian companies is a signal that US sanctions against Russia are starting to crumble.
The Yamal LNG and the Arctic LNG 2 projects are a great success story in expanding Russia’s LNG market to China and other markets of the world including Japan. They are also part of President Putin’s aim to make Russia the world’s largest producer and exporter of LNG.
When it comes to the Natural gas and LNG market, Russia is on a win-win ticket. It has consolidated its grip on the European Union’s (EU’s) gas market well into the future by offering reliable and cheap supplies of natural gas. And with the completion of both Nord Stream 2 and the Turk Stream by the end of 2019, its grip on the EU’s natural gas market will be unshakeable.
It is true that Russia’s LNG ambitions will face formidable resistance from Qatar, Australia and the United States. Still, Putin’s Russia will achieve its goal of becoming the world’s LNG producer and exporter.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London