Russian companies Novatek and Sovcomflot have reached an agreement to create a joint shipping venture to transport liquefied natural gas (LNG).

The new venture SMART LLC will be registered in Vladivostok and it will be formed by December 31.

SMART LLC will focus on Arctic LNG 2 and other Novatek’s future LNG projects in the Russian Arctic region.

In cooperation with other shipyards, the new joint venture will provide the technical designs for future vessels, give orders for shipbuilding and monitor their construction.

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The new entity will serve as the ship-owner and fleet operator and will also arrange ship financing.

Sovcomflot president and CEO Sergey Frank said: “Establishing a JV with Novatek is the optimal solution, considering the high capital intensity of the projects, as well as its long-term nature and the financial resources required.

“It also recognises the benefits of using the latest technologies and our experience of fleet management in severe ice and climatic conditions.

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“The company is potentially open for other professional investors and participants taking into account prospects of the development of Novatek’s Arctic LNG projects.”

The joint venture will place an order for the construction of 17 new-generation Arc7 LNG carriers. The ships will be built at the Zvezda shipbuilding complex.

The vessels are scheduled to be delivered between 2023 and 2026.

Novatek chairman of the management board Leonid Mikhelson said: “An optimised model of transporting LNG from the Russian Arctic region via the Northern Sea Route to major global markets, including the Asia-Pacific region, will support the successful implementation of Novatek’s Arctic LNG projects, as well as reaching the goal set by the Russian President to ensure an increase in annual cargo traffic along the Northern Sea Route to 80 million tonnes in 2024.”