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Total signs definitive agreements for entry into Arctic LNG 2

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LNG Industry,

Total has announced that it has signed the definitive agreements with Novatek for the acquisition of a direct 10% interest in Arctic LNG 2.

Arctic LNG 2 is a major LNG development led by Novatek on the Gydan Peninsula, Russia. It has a production capacity of 19.8 million tpy or 535 000 boe/d. The project will also develop more than 7 billion boe of resources in the Utrenneye onshore gas and condensate field. It will involve the installation of three gravity-based structures in the Gulf of Ob, on which three liquefaction trains (6.6 million tpy each) will be installed.

Taking into account Total’s 19.4% stake in Novatek and Novatek’s intention to retain 60% of the project, the group’s overall economic interest in the LNG project will be approximately 21.6%. If Novatek makes the decision to decrease its participation to below 60%, Total will have the possibility to increase its direct share up to 15%.

According to the statement, both parties also agree that Total will have the opportunity to acquire a 10 – 15% direct interest in all of Novatek’s future LNG projects located on both the Gydan and Yamal peninsulas.

Patrick Pouyanné, Chairman and CEO of Total, said: “We are delighted to have concluded the definitive agreements for our entry into this new world class LNG project based on the vast Russian gas resources alongside our partner Novatek. Arctic LNG 2 builds on the success of Yamal LNG and will introduce several innovative solutions to further increase competitiveness.

“Arctic LNG 2 fits into our strategy of growing our LNG portfolio through competitive developments based on giant low cost resources primarily destined for the fast growing Asian markets.”

LNG from the project will be delivered to international markets by a number of ice-class LNG carriers that will be able to use the Northern Sea Route and a transhipment terminal in Kamchatka for cargoes destined for Asia, and one close to Murmansk for cargoes destined for Europe.

A final investment decision on the project is expected to take place in 2H19, with the startup of the first train planned for 2023.

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