NOVATEK, ROSATOM Sign Northern Sea Route Deal

ROSATOM is building new icebreakers for use in the Northern Sea Route

Russian gas producer OAO NOVATEK (NOVATECK) says State Atomic Energy Corporation ROSATOM will provide it with icebreaker support on the Northern Sea Route under a new agreement between the companies.

The agreement calls for the two parties to work together to navigate the Arctic Water and White and Baltic Seas, coordinate investment projects, and develop new technologies and products for extracting, transporting, storing and processing natural gas and gas condensate.

"The Company is active in the Arctic Region and has pioneered the transportation of hydrocarbons by tankers through the Arctic Ocean's Northern Sea Route," said Leonid Mikhelson, chairman of NOVATEK's Management Board.

"We are planning to scale up operations and develop our hydrocarbon fields on the Yamal and Gydan peninsulas and in the Gulf of Ob.

"A mutually beneficial cooperation with ROSATOM reinforces our confidence in implementing our long-term development plans and underscores our commitment to conducting all of our operation in a sustainable development manner consistent with industry best practices."

Since 2010, NOVATEK has been using the Northern Sea Route to transport liquefied natural gas (LNG) and stable gas condensate from its Yamal LNG project.

Under the new deal ROSATOM will provide icebreaker services to NOVATEK for the next 15 years.

"One of ROSATOM's main goals is to develop the Northern Sea Route," said Sergei Kirienko, the corporation's general director.

"That is why we are building a new generation of nuclear-powered icebreakers, guaranteeing reliable operation of this major traffic artery in the long-term period.

"This is a mutually beneficial agreement – for ROSTATOMflot it is important to have a stable demand for its services and for such companies as NOVATEK, it is essential to be confident that its hydrocarbon production is transported the most effective way."

The Northern Sea Route is receiving increasing attention from a range of companies as falling levels of Arctic ice make activity there more practical.