Italian Bank Could Fund Novatek's Giant Arctic LNG 2 Project

Stephen Jewkes
Friday, October 22, 2021

Italy's biggest banking group Intesa Sanpaolo could help fund Novatek's Arctic LNG 2 project even as some European governments show lukewarm support for the giant Russian gas project.

"We are studying the dossier ... though no decision has as yet been taken," Antonio Fallico, chairman of group unit Banca Intesa Russia, told Reuters on Wednesday.

Fallico said the bank had been invited to look at the financing deal by SACE, the state-owned Italian export credit agency.

"If the bank decides this project does not breach our policy in some way we'll do it," he said.

In September, Novatek CEO Leonid Mikhelson voiced concern that European governments were not keen on helping the company in the face of environmental opposition.

A group of mostly Green Party lawmakers from the European Parliament in May urged the leaders of Germany, France and Italy not to support the project due to climate change concerns.

"This project is 96-97% decarbonized... we're talking of gas, not oil," Fallico said.

Earlier this year, Novatek shareholders approved external financing of $11 billion for the Arctic project, expected to start production of liquefied natural gas (LNG) in 2023.

The $21 billion project, which received final investment approval in 2019, is expected to reach full capacity of almost 20 million tonnes per year in 2026.

In October, top management at Russia's largest LNG producer visited Rome to canvass support.

Mikhelson said in September Novatek had credit lines open for a third of the total financing from Russian banks, adding Chinese and Japanese banks could provide the rest.

The pressure on institutional investors from climate lobby groups to stop funding fossil fuel companies has intensified markedly in recent years.

Fallico said Banca Intesa was also looking at funding projects in Russia to build hydrogen production plants.

Russia has ambitious plans to become a world leader in the production of so-called blue and green hydrogen, targeting a global share of 20%. (Reporting by Stephen Jewkes; Editing by Valentina Za and Mark Potter)

Categories: Offshore Energy LNG Industry News Activity Arctic Europe

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