(Yicai Global) Dec. 11 -- The largest China-Russia economic project has come into operation.
China will purchase 4 million tons of liquefied natural gas (LNG) each year from Yamal in Russia's Arctic to optimize its clean energy supply.
Russian President Vladimir Putin inaugurated the Yamal project's first LNG production line on Dec. 8. The project is the first major overseas cooperative project since China's President Xi Jinping proposed the Belt and Road.
Novatek PAO [MCX:NVTK], Russia's largest natural gas supplier, controls the project with a 50.1 percent stake. The company received international financing of USD19 billion, of which USD12 billion came from Chinese sources, state-run oil giant China National Petroleum Corp. (CNPC) and the Silk Road Fund, a state-owned investment fund among them.
Yamal holds 1.3 trillion cubic meters of natural gas reserves and is forecast to attain 25 billion cubic meters per year after full production. Three LNG production lines set to go into operation this month, next year and 2019, respectively, will each output 5.5 million tons annually.
After the project is fully operational, China will purchase at least 4 million tons of LNG from it each year, per the agreement, or between 10 percent and 15 percent of China's total LNG imports, thus greatly raising the country's stable supply of clean energy.