Russian LNG exporter warns against vilifying country's gas

Elena Mazneva and Dina Khrennikova March 16, 2018

MOSCOW (Bloomberg) -- Russia’s political tensions with Europe and the U.S. should not be a reason to denounce the nation’s energy supplies, which are just as essential for the global market as anyone else’s, according to liquefied natural gas exporter Novatek PJSC.

“We don’t understand why cargoes now have a DNA attached to them,” Mark Gyetvay, CFO for Novatek, said in an Bloomberg television interview with Guy Johnson and Matthew Miller.

“Why all of a sudden we got to this point when there is good and bad gas,” with “good gas coming from everywhere else and bad gas coming out of Russia,” the executive said Friday in London. “We’ve been vilified for delivering gas to the market.”

The furor between Russia and the UK in the wake of the nerve-agent attack earlier this week prompted Prime Minister Theresa May to retaliate by expelling Russian diplomats and seeking alternatives to Russian gas, including LNG produced by Novatek. This followed shipments earlier this year to the U.S., which drew attention because some of the LNG was produced at the Arctic plant that’s been under U.S. financial sanctions.

All cargoes are supplied by traders who choose the most profitable destination, this is how commodities markets work, Gyetvay said.

Yamal’s gas was sold free on board from the LNG plant “to a trader who then sold it off to another trader who took it to the market where they felt they could receive the highest netback,” he said.

Novatek, which started its $27-billion Yamal LNG plant in December in an environment of U.S. sanctions against Russia, doesn’t see any impact on its business “on a major degree” from the recent spat with the UK, Gyetvay said. “We are a private company.”

Novatek, whose largest shareholders include Russian billionaires Leonid Mikhelson and Gennady Timchenko, as well as French energy giant Total, last year outlined plans for some $60 billion of investment to become a global force in the LNG market and the biggest producer of the fuel in Russia.