After The United States, The European Union and Canada having imposed sanctions on Russia due to its interventions in Ukraine, many of the Russian projects had a big question mark of huge funding requirement. One of these projects is a $27 billion natural-gas project in the Russian Arctic. This project is expected to export 16.5mn tons of LNG per annum.
Yamal LNG project has signed two loan deals with Export-Import Bank of China and China Development Bank for 9.3 billion euros and 9.8 billion yuan. The funds are sufficient enough to take the project through which is scheduled to start shipping its liquefied natural gas in the year 2017. This is one of President Vladimir Putin’s flagship projects. This loan from China for Yamal LNG project has become symbolic for the Kremlin of Russia. Proving its ability to execute large deals irrespective of western sanctions. After the sanctions, Russia reciprocated with banning food imports from the EU, United States, Norway, Canada and Australia.
This financing deal for Yamal LNG, is one of the biggest ever in Russian corporate history and that too it being from China has a lot more importance in the region’s political scenario. The deal has a great significance in view of Mr Putin’s push to boost commercial and business ties with China since sanctions were imposed on Russia.
In lieu of the sanctions and further ban by Russia on European food imports, Russia has also sought deals in Asia in recent years to reduce its dependence on the West for financing and sales of oil and gas.
This project is expected to export 16.5mn tons of LNG per annum by the year 2019 when it goes in complete operation. Mr. Patrick de la Chevardiere chief financial officer of Yamal LNG, said, “ Yamal has already signed commercial contracts for 95% of its total production with the Asia-Pacific countries using an oil-linked formula. Only a small portion will go to European Countries”.
It is said, “These loans have come at a crucial time ahead of President Putin’s visit to his Chinese counterpart Mr. Xi Jinping in June 2016”.