By Vladimir Soldatkin
MOSCOW (Reuters) - Western sanctions will force foreign shareholders to dig deeper in their pockets to fund Russia's Yamal LNG project, key for Moscow's plans to carve out a greater share of the frozen sea-borne gas market, Novatek (MM:NVTK) said on Thursday.
U.S. and EU sanctions, imposed over Russia's role in the Ukraine crisis, has targeted Novatek among other companies hitting the firms' ability to secure long-term funding.
Novatek, the main stakeholder in the Yamal project, has said the measures did not hurt its production and commercial activity.
However, Leonid Mikhelson said the company and other shareholders of the Yamal LNG project, including France's Total (PA:TOTF) and China's CNPC, will have to rely more on its own capital to finance the project because of the sanctions.
"We are able to increase the share of stakeholders' financing to stick to the timetable," he told a conference call, a day, after the company posted forecast-beating second-quarter net income.
Investments in Yamal LNG, on the Arctic peninsula under the same name, have been valued at $27 billion (15.98 billion pounds). The project will help Russia double its share in the global LNG market by 2020 from 4.5 percent currently.
Shareholders have already invested $2.6 billion in the project, while Novatek has said it would rely more on financing from Chinese banks.
China Development Bank Corporation, Industrial and Commercial Bank of China (SS:601398), Bank of China (SS:601988) and China Construction
Russia's only working LNG plant is on the Pacific island of Sakhalin. The plant, controlled by state-owned Gazprom (MM:GAZP), produces 10 million tonnes of liquefied natural gas a year.
The sanctions, which also hit Gennady Timchenko, Novatek's co-owner, forced Total, which had 18 percent in the Russian company, to stop buying its shares.
Mikhelson said on Thursday that despite the sanctions, Yamal LNG's timetable has not been changed. It is due to produce 16.5 million tonnes of LNG per year in 2018.
(Additional reporting by Vlasta Demyanenko, editing by Thomas Grove)