Gennady Timchenko: Novatek Sees Promise in Arctic Region

The Arctic Yamal region of Russia has become the subject of much conversation among Gennady Timchenko and Leonid Mikhelson’s Novatek, and Russia’s OAO Gazprom, among others. Energy traders and oil conglomerates are eyeing the region, and the aforementioned ventures are, according to news reports, considering aligning their interests in order to increase natural gas production capacity in the Arctic Yamal.

Oil and gas development has expanded at breakneck speed over the past few decades in northwest Siberia. The region between the Ural Mountains in the west and Novosibirsk in the south produces around 78 percent of Russia’s oil and 85 percent of its natural gas. The Yamal region has become the epicenter of this expansion, and the Yamal Peninsula is said to be the home of Russia’s largest unknown tapped gas reserves.

Gennady Timchenko’s Novatek is now studying the possibility of raising the gas production capacity near the port of Sabetta. Novatek announced in press statements that it plans an LNG plant near the port in partnership with Total SA. Customers who will benefit from the expansion include Asia, Europe, and South America.

Russia has been planning on increasing foreign investment in the Yamal region for several years, and investors are keen to get their hands into what appears to be Russia’s untapped reserves. As co-head of Gunvor and one of the world’s foremost energy traders, Gennady Timchenko is familiar with spotting potential for equitable energy deals. “Yamal is simply the biggest energy project on the planet and, as such, all of the major energy companies want to be involved,” Chris Weafer, a strategist for Uralsib investment bank told the Financial Times. Coining deals in the region the “Energy Ebay,” Russia is offering barter deals with some entities to help them extend their global reach.

News reports stated that an Indian consortium led by ONGC Videsh Ltd. (the overseas arm of Oil and Natural Gas Corp.) is also in talks with Gennady Timchenko’s OAO Novatek. The India consortium hopes to acquire a 15 percent stake in OAO Yamal for developing the natural gas field.