Russian Co. Asks Japan to Invest in $36b LNG Project
Novatek, a leading gas company in Russia, has asked Mitsubishi Corp. and Mitsui & Co. to invest in an Arctic liquefied natural gas project expected to cost maximum $36.1 billion.
If the companies agree to participate, they would be asked to foot 10% of the cost. But the Japanese government is examining the possibility of using state funds to pay for half of what Novatek is requesting, once both general traders decide to participate in the project, Nikkei Asia reported.
Prime Minister Shinzo Abe thinks the possible economic assistance could help Japan's negotiating position in talks with Russia regarding the return of four Russian-held islands north of Hokkaido.
The fate of any deal, however, hinges on what Mitsubishi and Mitsui & Co. decide.
Novatek plans to build an LNG base in northern Russia, within the Arctic Circle. The project will start as early as 2020, and the field is expected to begin producing an annual 20 million tons or so of LNG three or four years later.
The company initially estimated the cost at $27 billion.
Novatek plans to take 60% of the project. French oil major Total is on board for 10%. The Russian company is believed to be also asking Saudi and Chinese companies to buy the remaining concessions.
Novatek has stepped up efforts to persuade Mitsubishi Corp. and Mitsui & Co. to finalize deals by spring. Russian President Vladimir Putin nudged Abe on the matter when the two men met in January, according to a Japanese government official.
source: Financial Tribune
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