Gazprom and NOVATEK signed a memorandum yesterday whereby both companies will consider creating several ventures to jointly develop the upstream assets on Yamal and Gydan Peninsula.
Troika's view: ? At Yamal, the two companies are studying a venture that would engage three fields owned by Gazprom (North Tambeiskoye, West Tambeiskoye and Tassiskoye) with peak production potential of about 45 bcm. The first output (wet layers of North Tambeiskoye) is scheduled for production only in 2025 at this point. Gazprom's share in this venture would be 75%, while NOVATEK's would be 25%. The resource base can become the feedstock for a LNG project, according to the press release from both companies, potentially using the infrastructure of Yamal LNG. We think this is potentially good news for Yamal LNG, as it highlights the future importance of the project. However, given that the peak output from Gazprom's share is currently forecast for 2030, it is hard to view the fields as stock_market moving for either of the two companies at the moment.
? On Gydan Peninsula, a 50_50 JV would develop NOVATEK's recently purchased Salmanovskoye field, production at which is due to start in 2018, with peak output of 20.5 bcm reached early in the next decade. We feel this JV is much more important for the market than the Yamal one, as it opens several opportunities for NOVATEK.
First, both companies may bid for licenses in government tenders in the region, effectively increasing NOVATEK's resource base and becoming the company's next big move after Yamalo_Nenetsk satellites plateau. Second, it leaves no doubt about the monetization of this gas, as Gazprom will take it into its system. Finally and perhaps more importantly, we would not exclude the possibility that Gazprom will have to take a very substantial portion of infrastructure capex, such as building the pipeline from the fields to the existing Yamburg link (hence opening up the Geofizicheskoye field for NOVATEK). In general, we feel that this JV can become very significant down the road. We would remind of another JV set up between NOVATEK and Gazprom Neft several years ago that was unclear to many at the beginning, but later grew up into what is now known as SeverEnergia - the largest project to come from the independent producers after NOVATEK's Yurkharovskoye field.