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Russia's Yamal LNG project to pay off even amid $30 per barrel oil price — Novatek CEO

"Production costs are very low and liquefaction costs are not bad," Novatek CEO Leonid Mikhelson said in an interview

MOSCOW, March 21. /TASS/. The Yamal LNG project will pay for itself even in case oil prices are around $30 per barrel, despite the fact that the cost of liquefied natural gas is traditionally pegged to crude prices, Chairman of Novatek management board Leonid Mikhelson said in an interview aired by the Rossiya-24 TV news channel on Monday.

"Probably today we should focus on those $30 per barrel… But still the project is implied [to be implemented till] 2045, we focus on credit resources for a 15-year period and even under most pessimistic estimates the project is economically justified and lossless," Mikhelson said.

"Production costs are very low and liquefaction costs are not bad. I think the Sabetta LNG will be competitive almost everywhere," he added.

Yamal LNG is a large scale project on creating a liquefied natural gas production facility with 16.5 mln tonnes per year capacity. Yamal LNG unlocks access to the vast gas resources of the Russian Arctic, while also opening a new LNG sea transport route to Asia using ice-class LNG carriers. The project involves the creation of transport infrastructure, including a seaport and an airport near the Sabetta village (north-east of the Yamal Peninsula).

Russia and China signed the intergovernmental agreement on the acquisition of Yamal LNG shares by China’s Silk Route foundation in September 2015. Before the transaction the share of Novatek in the "Yamal LNG was 60%, while French Total and China National Petroleum Corporation held 20%. The acquisition the share of Novatek in the project reduced it to 50.1%. China’s CNPC holds 29.9%, while French Total owns 20% and in the project.

The launch of LNG production is scheduled for 2017.