29 Oct 2018 13:53

Novatek offered stake in planned rail line to Sabetta; no decision yet - newspaper

MOSCOW. Oct 29 (Interfax) - Novatek is currently deciding whether to take a stake in the project company that will build a rail line to the port of Sabetta in Yamalo-Nenets autonomous district, the newspaper Vedomosti reported on Monday citing an unnamed government official and participants in the talks.

A concession agreement might be signed with Gazprom (or a subsidiary, Gazpromtrans LLC) and Russian Railways (RZD),Vedomosti said.

The project, which is an initiative from the authorities in Yamalo-Nenets autonomous district, was discussed at an August meeting held by Deputy Prime Minister Maxim Akimov, Vedomosti's sources said.

An official at the Transport Ministry told Vedomosti that the project is being drawn up. "The question is whether the project will receive federal money. Even if it's not included in the 'mainline infrastructure plan' it might be added," a source close to the Transport Ministry told Vedomosti.

The rail line is needed to supply equipment to resource extraction sites (investment in development of the Yamal and Gydan peninsulas will total 7 trillion rubles up to 2035), and to provide a route for freight from the Northern Latitudinal Railway, which runs close to 20 oil and gas fields, to the Northern Sea Route.

The consortium of investors might submit the private initiative to the government in the first half of 2019, a participant in the meeting told Vedomosti.

An agreement on state-private partnership in construction of the rail line has been in effect since 2015. The investor is VIS Transstroy. It is supposed to finish the work in 2019 but hasn't even begun yet. "This is not unusual. The agreement has been extended. The road must be completed by 2022," VIS representative told the newspaper.

But the agreement is likely to be annulled, the government official said, which was confirmed by the participant in the talks: under the old agreement, the rail line would remain the property of the investors, while under the new agreement it will belong to the state.

The goal of the 2015 agreement was to draw up the project, Vedomosti said. Analysis shows that a federal concession is optimal, Yamalo-Nenets autonomous district Deputy Governor Alexander Kalinin said. The new agreement has been drafted, the feasibility study is ready and negotiations with participants are underway, the official said.

With the project's switch to federal status, a different participant configuration may be needed, the VIS representative said. "The decision is being made at the state level and we will definitely support it," the representative said.

The new agreement should drastically reduce construction costs: previously the line from Bovanenkovo cost over 113 billion rubles in prices from previous years, which would be 176 billion rubles today, the participant in the negotiations said. Under the new agreement the line would cost 113 billion-115 billion rubles, thanks to savings from building just a single-track line, without a roadbed for a second line. The new line would have capacity for 8 million-10 million tonnes of freight a year, the regional governor's office told Vedomosti.

Gazprom's participation in the concession is logical: the gas giant is already building the Obskaya-Bovanenkovo-Karskaya rail line using technologies adapted to permafrost. Gazprom wanted to sell the line to RZD and then-prime minister Vladimir Putin gave an order to agree the deal in 2009. But RZD refused to pay 130 billion rubles - Gazprom's asking price - for the isolated rail line. The option of having the concessionaire buy the Obskaya-Bovanenkovo-Karskaya rail line from Gazprom is now being discussed, the participants in the negotiations said.