Novatek will pay a fair price for a stake in Sakhalin-2

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to the InfoTEK online magazine on the reasons and consequences of NOVATEK's entry into the Sakhalin-2 project.

Alexey Belogoryev believes that the price Novatek to pay for its stake in the Sakhalin-2 LNG project is fair.

The Russian government allowed Novatek to buy a 27.5% stake in Sakhalin Energy for 94.8 billion rubles. This company is now the operator of Sakhalin-2, Russia's first large-capacity LNG project.

"In the current conditions, from the point of view of foreign investors in Russia, the risks are so high that any assets can be sold undervalued. Under other conditions, the package would cost much more, but in the current situation, this is a fair price. In any case, it looks quite adequate," Belogoryev remarked.

The expert stressed that Novatek's entry into the project is beneficial to everyone. Michelson's main interest lies in entering new sales markets, including through a long-term Shell contract for the annual supply of 1 million tons of LNG until 2028.

"The fact that the key LNG consumer is Japan, which does not plan to reduce imports, plays a big role here," the analyst said.

However, Novatek is unlikely to bring any new technological solutions to the project and will be able to contribute to the implementation of the Sakhalin-2 third line construction project, which was frozen earlier, since there is no resource base for it. At the same time, the company does not have the appropriate competencies to develop new reserves of Sakhalin.