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Operator: Good day and welcome to the Full Year 2021 Novatek Financial Results Conference. Today's conference is being recorded. For the duration of the call, you will all be in mute. However, after the end of presentation, you will have the opportunity to ask questions. [Operator Instructions] I will now hand over to Alexander Nazarov, Head of Investor Relations, to begin today's conference. Thank you.
Alexander Nazarov: Ladies and gentlemen, shareholders and colleagues, good afternoon and welcome to our fourth quarter and full year 2021 earnings conference call. Chairman of the Management Board and member of the Board of Directors of NOVATEK, Mr. Leonid Mikhelson, will be the main speaker during today's Q&A session. Before we begin with the specific conference call details, I would like to refer you to our disclaimer statement, as is our normal practice. During this conference call, we may refer to forward-looking statements by using words such as our plans, objectives, goals, strategies and other similar words which are other than statements of historical facts. Due to known and unknown risks and uncertainties, actual results may differ materially from those implied by such forward-looking statements which reflect our views as of the date of this presentation. We shall have no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Please refer to our regulatory filings, including our 2020 Annual Report, as well as any of our earnings press releases and documents throughout the past year for more details on the risks that may influence our results. This past year has seen unprecedented volatility in the commodity markets, largely due to record cold winter and a warmer summer, low inventory volumes, supply disruptions and greater than expected economic growth recovery after COVID-related restrictions to name a few. This winter's demand spike in the winter of 2020-2021, pushed energy prices to record levels with major implications for consumers, economies and clean energy transition. We all observed just how natural gas and LNG spot prices could be in extreme volatility going to unprecedented lows of around $3/MMBtu in 2020 to sky-high peaks above $40/MMBtu in the end of 2021. As we conclude the first month and a half of 2022, we continue to witness a global gas market with high price volatility and extremely low inventory levels in Europe, the current level is 33% versus average of 50% in 2017-2021. Natural gas is a cleaner fuel in terms of combustion and therefore, plays an integral role in any of the energy transition scenarios. It will remain an essential element to energy security -- needed for energy market balance in many regions for decades to come. According to preliminary estimates, the global natural gas consumption strongly rebounded in 2021 by 5%, more than double the decline seen in 2020. In Asia, consumption year-on-year grew by 7%, mostly driven by increase of consumption in China by 12%. Uninterrupted global LNG trade growth has continued throughout 2021 with the increase of 20 million tons or by 6% to 385 million tons, driven mainly by substantial demand growth from Asian and Latin American consumers. The LNG market growth rate has yet again exceeded that of global natural gas consumption. LNG reconfirmed the critical role that it plays in ensuring security and continuity of supply as well as meeting unexpected demand swings. Throughout 2021, we witnessed a growth in the LNG market with a renewed contracting activity which spiked to more than 70 million tons in 2021 and announcements of new and upcoming final investment decisions. We have seen new leaders in imports where China finally becoming the largest import LNG market and in exports, where Australia for the whole year and U.S. for the month of December outpaced Qatar volumes. In the pursuit of ambitious energy transition goals, it is now evident that the two main principles of energy supply, security and affordability of supply have been largely neglected. We have always argued that today's energy solutions should answer three main questions: sustainability, security and affordability. In our view, natural gas is the ultimate answer to all three of them for the coming decades. Today, affordability is a key concern for energy markets as prices have risen to record levels. Prioritizing sustainability in a move toward the rapid transition today proved to be a failure whereby accelerated consumption growth led to skyrocketing prices for fossil fuels. The global emissions grew considerably compared to the levels of 2020 due to global economic recovery and resulting growth in energy demand. The energy generation drivers are not heading towards a sustainable energy transition as sought by many governments and global organizations. According to the latest estimates, in 2021, due to rapid growth, the overall CO2 emissions may reach 36.4 billion tons of CO2 which is close to the pre-pandemic high of 2019. It should be noted that based on International Energy Agency's study, coal consumption which is the single-largest source of global carbon emissions, is expected to have grown by 6% over 2021 to almost a record high of approximately 8 billion tons of which is a record level with a backdrop of recovery of economy, unfavorable weather for renewable energy and problems of other energy goods. Coal-fired power generation which accounts for 36% of the world's power generation reached unprecedented peak having grown by 9% year-on-year which is the fastest pace since 2011. Already in 2021, CO2 emissions from electricity generation reached a record level, with coal as the main driver of this increase accounting for over 800 million tons of CO2 emissions growth. The current energy crisis proves that the energy transition without hydrocarbons is unrealistic. In the reporting year, the European Commission made the decision to endorse natural gas as a green transition fuel. Ensuring the uninterrupted supplies of affordable energy during the energy transition and the key role of natural gas in power generation were supported by BlackRock, one of the largest global investment funds. The only way to achieve this is to ensure that society has plentiful access to reliable and affordable energy sources, unlike some of current energy policies advocated today that expose whole regions to energy supply crisis. The problem of lack of energy resources shall be solved with a focus on reducing emissions, use natural gas as the cleanest fossil fuel. NOVATEK is one of the cleanest natural gas producers in the oil & gas universe and our LNG is one of the greenest in the world. The cold Arctic climate, in which NOVATEK's LNG is produced, enables the world's highest energy efficiency of the liquefaction process and therefore low emissions. And the new engineering concept involving GBS LNG trains helps us minimize the impact on the Arctic environment. One of NOVATEK's key advantages is in its ability to control the full LNG value chain and deliver competitively priced gas to key consuming markets, thus addressing energy affordability. We are making significant efforts to further reduce our carbon footprint at our operating assets and considering new solutions in our journey towards a net zero future. Our business includes actively developing cooperation with our partners to decarbonize our operations and deliver low-carbon products, including supply of ammonia and hydrogen, with more than 10 agreements signed in 2021. As part of our commitment to improve the transparency and credibility of our ESG data, we have improved our 2021 sustainability reporting which includes disclosing key climate change metrics: Scope 3 GHG emissions attributable to the company's upstream production; Scope 1 GHG emissions broken down by source; and methane emissions intensity evolution over a 3-year period. Our Scope 1 and 2 GHG emissions were verified for the first time by an independent auditor separately from the report verification process and our GHG emissions management system was confirmed to comply with international ISO standards. Our sustainability report describes a range of measures implemented by NOVATEK to conduct permafrost monitoring and geocryological risk assessment. To further improve the accuracy of our GHG emissions, in Q4 of 2021, we launched a satellite project to monitor methane emissions at our fields. The preliminary results of the monitoring show no detectable methane leakages and uncontrolled emissions at NOVATEK facilities. In October, NOVATEK held the company's first Arctic LNG Vessel Owners Conference to promote green shipping and introduce sustainable technical solutions with a view to reducing the carbon footprint of vessels operating in the Arctic. In 2021, NOVATEK's Board of Directors established a subcommittee on Climate and Alternative Energy within the Board's strategy committee that held four meeting during the year. The subcommittee considered a number of issues, including production of low-carbon products, renewable energy sources, progress in achieving environmental and climate change targets and reporting on GHG emissions. Over the last year, the number of sustainability issues considered by the Board of Directors' Remuneration and Nomination Committee has significantly increased during last year, including human rights, HSE, charitable events and information security. In addition, we continued to develop our management systems and by the end of the year, we approved a new Biodiversity Conservation Management standard aimed at minimizing effect on environment and protection of biodiversity, along with the Biodiversity Implementation Strategy of our second large-scale project Arctic LNG 2. An important social achievement this past year was the approval of our Human Rights Policy by the Board of Directors. The policy formalizes our approach to human rights protection and includes all fundamental principles enshrined in the Universal Declaration of Human Rights, the International Labor Organization conventions and the UN Global Compact. Also, this past year, NOVATEK became signatory to the UN Global Compact to further incorporate the organization's principles in our strategy, culture and daily activities, as well as participate in joint projects that contribute to the achievement of the UN Sustainable Development Goals. We are continuing our pre-FEED study for our Obsky Gas Chemical Complex to produce low-carbon ammonia. In the upcoming weeks, we expect to get initial reports from our contractors that will allow us to better consider and approve engineering solutions, process schemes and economic parameters of the project. In Q2 2022, we plan to complete the pre-FEED study and to move forward to the project's next stage of making the final investment decisions. We will update the market on this progress in due course. As part of this project, NOVATEK received licenses for the Obskiy license area in Yamal and Tadebyayakhinskiy, an area in Gydan, with the purpose of CO2 injection and long-term storage. At the beginning of 2022, we completed the first of three stages of international certification for long-term CO2 geological storage sites in the Yamal and Gydan Peninsulas. Site feasibility certificates have been issued, enabling further study of the sites and subsequent certification stages. Det Norske Veritas, DNV, an independent certification and classification society, issued the certificates of conformity with international standards. Pursuant to the issued certificates, the geological formations within the license areas that I named, have the capacity to store at least 600 million tons of CO2 each which is supported by calculations. As a part of the commercial development of the Obsky GCC project, in December 2021, NOVATEK and Uniper signed a Term Sheet on long-term supply of up to 1.2 million tons of low-carbon ammonia per annum to primarily the German market. The product price will be indexed to relevant European and global benchmarks. Our first flagship LNG project, Yamal LNG, has proven its position as one of the most efficient LNG projects in the world. In 2021, Yamal LNG received the approval of a technical expert review that trains 1-3 can effectively operate at 120% of nameplate capacity at below-zero temperatures. Low temperatures allowed trains 1-3 to run at more than 17% above the nameplate capacity in 2021. In addition, in May 2021, we commissioned Train 4 of the plant. This helped Yamal LNG to produce more than 19.64 million tons of LNG in 2021 which is 4% higher than in 2020. Yamal LNG also produced 1 million tons of unstable gas condensate. In 2021, the project has shipped 266 cargoes or about 19.5 million tons, of which, 199 cargoes, or 75%, were dispatched under long-term contract, while the remaining 25% were dispatched under spot sale contract. We completed the reserves assessment on the Jurassic layers based on our successful 2021 exploration drilling and seismic surveys at the South-Tambeyskoye field. An increase in reserves was confirmed which is expected to be at least 320 billion cubic meters of gas, more than 20% of the current in-place reserves under the Russian classification. This increase of reserves together with the higher productivity of LNG trains will allow maintaining the production plateau. In 2022, geological exploration will continue as the drilling of two exploration wells is planned. We have made excellent progress in all areas of the construction at the Arctic LNG 2 project. As of December 31, 2021, the overall project completion status is now estimated at 59% and the progress on the first train estimated at 78%. We completed concrete works at GBS number one. At the moment, we are integrating topside modules onto the GBS. 10 modules have already been installed on GBS number one. 13 of the total 14 modules for Train 1 have arrived to Murmansk and another one is on its way and expected to arrive today in the evening. Today, the Arc7 ice-class vessel AUDAX has delivered TMP-002 module which is the NGL recovery and fractionation unit to the LNG Construction Center in Belokamenka via the Northern Sea Route. This voyage is unique in terms of passage by a ship of this size through the eastern sector of the Northern Sea Route with the assistance of a nuclear-powered icebreaker in February in difficult ice conditions. This voyage confirms the possibility of year round LNG supplies to the Asia-Pacific market via the Northern Sea Route. In Dry Dock number two, concrete casting of GBS 2 continues and about 154,000 cubic meters or 91% have already been poured. Modules construction for Trains 2 and 3 is underway. First modules for Train 2 are expected to arrive to Murmansk in May 2022. The first modules for Train 3 are expected to arrive to Murmansk in May 2023. As of December 31, 2021, we have drilled a total of 56 production wells, including 33 wells drilled in 2021. Essentially, we have drilled and completed enough wells to start production at GBS number one. In November, we signed credit facility agreements with international financial institutions and commercial banks. The maximum aggregate loan amount under the facilities to be provided by the Russian and international banks is €9.5 billion for up to 15 years. The facilities fully cover the project's external finance requirements. In June 2021, the first plane landed at the Utrenniy airport built specifically for the Arctic LNG 2 project on the Gydan Peninsula. The airport increased the efficiency of rotational personnel logistics for the project by replacing helicopter operations with planes. In 2021, the airport handled more than 2,000 flights. One of the main achievements during 2021 for NOVATEK was the uninterrupted construction works at Arctic LNG 2. Despite all of the global logistic disruptions and COVID restrictions, we managed to maintain the project construction schedule and are fully on track to start up the first train in 2023. In 2021, the CapEx for Arctic LNG 2 was USD 5.3 billion and we expect approximately the same expenditures in 2022. At year-end 2021, about 57% of total project's CapEx was financed. In 2021, our Cryogas-Vysotsk project also demonstrated strong operational results during 2021, operating at 115% of its nameplate capacity and produced an all-time high volume of 757,000 tons which is 38% more than in 2020. In December 2021, monthly LNG offloading volumes reached a record level of 78,000 tons. The increase in annual productivity in 2022 was achieved by debottlenecking and removing production restrictions as well as achieving a higher reliability rate for the complex compared to the initially planned. To further improve the productivity of the complex, construction of a booster compressor station is being considered for 2023 which will increase the LNG output level to 820,000 tons per year. During 2021, we opened 10 new LNG fueling stations in Europe which increased our retail network of Novatek Green Energy, our wholly owned subsidiary, to 16 of which 12 are in Germany and 4 are in Poland. We plan to expand our retail network to more than 40 retail LNG fueling stations in Europe. Total sales via our LNG fueling network already exceeded 3,000 tons per month and for the full 2021, our total sales increased by more than 4x and reached more than 31,000 tons. In addition, of the reporting period, the network of our regasification stations expanded to 26 stations and reached 48 stations. Our domestic LNG fueling retail network expanded to 13 stations and we plan to open 3 more during this year. Our LNG sales via domestic retail network has grown to almost 22,000 tons which is more than 8x the previous year's volume. NOVATEK's hydrocarbon production totaled 626 million barrels of oil equivalent, including 79.9 billion cubic meters of natural gas and 12.3 million tons of liquids which is gas condensate and crude oil, resulting in an increase in total hydrocarbons produced by 18.1 million barrels of oil equivalent, or by 3% as compared with the 12 months 2020. Our total natural gas and liquids production including the proportionate share in the production of our joint ventures increased by 3.3% and 0.5%, respectively. The commissioning of gas condensate deposits within the North-Russkoye quarter which includes North-Russkoye and East Tazovskoye fields in Q3 2020, as well as the Kharbeyskoye field in the Q4 2021, fully offset the declines in hydrocarbons production at mature fields of our subsidiaries and joint ventures. As a reminder, in 2022, we plan to launch gas and condensate production at the Yevo-Yakhinskiy and Ust-Yamsoveyskiy fields, as well as the Urengoyskoye field within the Olimpiyskiy license area. That will help us to offset production decline at our mature fields and to demonstrate a slight increase in gas production. The trend of last year will continue with regard to liquid hydrocarbons. We will reduce oil production at our mature oilfields, with the decline accelerating as compared to 2021 but at the same time, we expect an increase in gas condensate production. Total liquids production in tons will decline but due to lighter gas condensate and higher gas production, we expect NOVATEK's total production in barrels of oil equivalent to slightly increase by around 1% in 2022. The company demonstrated impressive financial results during the past year, driven by significant increases in hydrocarbon prices and strong demand for natural gas. Our total revenues for 2021 amounted to RUB1.2 trillion, a record high in the company's history, demonstrating a significant increase of 63% compared to the previous year, or by RUB445 billion. Our natural gas sales also reached a historic record of RUB524 billion, representing a yearly increase of 46%, mainly thanks to the growth in revenues from sales on international LNG markets. IN 2021, the company sold 75.8 billion cubic meters of gas, of which 67.9 billion cubic meters, or 90% of natural gas volumes, were sold on the Russian domestic market and more than 7.9 billion cubic meters were sold in the form of LNG on international markets. Our volume of LNG sales on international markets was 10% of the total natural gas volumes sold, while it accounted for 43% of our natural gas revenues compared to 22% a year earlier. Our liquid hydrocarbons revenues also reached an all-time high and totaled RUB611 billion, demonstrating considerable increase by RUB270 billion, or by 79%, year-on-year. This revenue growth was largely due to high commodity prices for all our liquid products in both U.S. dollars and rubles, as well as a slight increase in sales volumes by 168,000 tons, or by 1% compared to 2020. The increase in sales volumes was also driven in part by purchasing unstable gas condensate from the Gazprom Group for de-ethanizination and further processing at our Purovsky plant, as proposed by Gazprom. Our operating expenses increased by RUB323 billion or by 59% compared to 2020. This came due to higher average costs to purchase hydrocarbons from our joint ventures, the condensate purchases from Gazprom as mentioned earlier and the incremental MET. The share of natural gas and liquids purchase costs and the incremental MET in our additional operating expenses amounted to 92%. Our normalized EBITDA for 2021 almost doubled year-on-year and became the highest level reported for the year in the company's history. This indicates the increase by 2020 by RUB356 billion. The increase in normalized EBITDA was largely due to a significant recovery in hydrocarbon prices which led to high performance of our subsidiaries, as well as great financial contribution from all our joint ventures, Yamal LNG and Arcticgas. In 2021, our capital expenditure program amounted to RUB192 billion, decreasing by 8% year-on-year. Most of the capital spent was focused on our LNG projects, the LNG Construction Center in Murmansk, the Ust-Luga upgrade, as well as the development of the North-Russkiy cluster. We will spend approximately RUB200 billion for our capital expenditure program in 2022. We would like to emphasize that it doesn't include expenditures for projects that are currently under investment decisions preparation stage including Obskiy GCC. As always, our CapEx guidance is subject to revisions depending on the macro-environment and on decision on specific projects. We will continue to spend capital into maintaining natural gas and liquids production target levels within the reach of the Unified Gas Supply System. Besides in 2022, our budget for geological exploration will grow by about 30% in 2022 mainly for preparing resource base for LNG projects. We're finalizing the construction of the LNG Construction Center near Murmansk and are continuing the construction of the hydrocracker complex and expanding the Ust-Luga Complex. In 2021, NOVATEK generated a record positive free cash flows in the amount of RUB228 billion compared to negative free cash flow in the amount of RUB33 billion a year earlier. In the reporting period, normalized profit attributable to NOVATEK shareholders, net of ForEx effect and effect of disposal of interests in subsidiaries and joint ventures, also achieved record high levels. It amounted to RUB421 billion which is a 149% increase compared to 2020. Since the dividend policy has been updated by increasing the minimum target level of dividend payout to 50% of the adjusted net profit according to IFRS, we will be able to pay a larger dividend significantly in 2021 on the back of this profit growth. In the last year, we have demonstrated many positive results that were aided by an improved macroenvironment, robust commodity prices. Moreover, we undertook a series of positive actions towards our climate and sustainability commitments that are consistent with our long-term goals of reducing our carbon emissions and expanding our global LNG footprint. We will remain focused on our core business activities and look forward to the startup of our next large-scale LNG project, Arctic LNG 2. We are continuing our efforts to decarbonize our operations and deliver one of the cleanest LNG to global markets. The company is poised to deliver another year of exceptional results under the present macroenvironment and we look forward to another year of optimism for the natural gas industry. We would like to thank everyone for attending today's conference call and for your continued support of NOVATEK. We are now ready to open today's session to questions and answers.
Operator: [Operator Instructions] We will now take our first question from Karen Kostanian from Bank of America. Please go ahead. Your line is open.
Karen Kostanian: Yes, good afternoon. Thank you very much for the presentation. Congratulations on the good results. I have a question about the future projects. Would you please tell us what is the current stage of the preparation for these future projects such as Obsky LNG and when we may expect specifics, does Novatec plan any presentation of any future strategy anytime this year? Thank you.
Leonid Mikhelson: Did I hear correctly -- but first and foremost, I would also would like to say good afternoon to all participants and thank you for participating in this conference. Did I hear you correctly that your question was about Obsky -- all future projects in general? All of them. Well, I heard about Obsky I would answer about this one. As you know, in Sabetta, we have established unique infrastructure opportunities and international airports, seaports and this infrastructure enables us to develop many future projects in Yamal. We, in 2021, obtained 2 new license areas for Chaselskoye and -- fields with significant reserves. We are now doing further appraisal activities there. And by putting them into one integrated production complex with the fields that we currently have, West-Seyakhinskoye and -- would allow us to implement, as was mentioned in the speech earlier, both a gas chemical project -- specifically this year, we're talking about the ammonia project and potentially, given that the 4 fields provide necessary production, we may also make a decision on future LNG projects.
Karen Kostanian: Could you please repeat the question about the strategy, the way you put it? Right, strategy. I just wanted to find out if we should expect an update its long-term strategy…
Leonid Mikhelson: Thank you for the question. In 2017, we presented our long-term strategy. And as you see, the main strategic plans and goals, we announced back then, we are fully in line with them -- in line with the strategy we adopted. We launched the LNG. We made the FID on and started the construction of our new project, Arctic LNG 2. As you see from our statements, we are undertaking major exploration activities for Arctic LNG 1. And based on the strategy of 2017, it is still relevant. Today, we are developing our LNG business. We are maintaining our core assets within the reach of the Unified Gas Supply System and we are expanding processing capacities in Russia as necessary. However, we see that the strategy does need to be way specified. We are considering opportunities in low carbon energy, gas chemicals projects to capture and store CO2 as was mentioned, potentially renewable energy. We are now undertaking wind measurements at Yamal. Making investment decisions will bring us closer to making our business carbon neutral. We are actively working towards this and once we are ready, we will present -- this won't be a new but rather an adjusted or updated strategy to our shareholders. Thank you.
Karen Kostanian: Thank you.
Operator: We will now take our next question from the English line from Ronald Smith, BSC. Please go ahead. Your line is open.
Ronald Smith: Yes, thank you very much for the call and presentation. I'd be interested in hearing your opinion on how LNG and gas contracting is evolving these days. Are long-term contracts fading in importance, given the highly volatile gas prices that we've seen in the last year? Are buyers wanting to return to oil links in those contracts that they're willing to sign? I mean I know this is a seller's market in LNG but has the -- have the negotiating positions of buyers and sellers really changed all that much in the last year? Thank you.
Leonid Mikhelson: Thank you. That is a very important question. And as for gas in global energy mix and speaking about LNG specifically, what we see today, we see today that 7 to 10 or maximum 15-year contracts are becoming more popular and fewer players are now interested in contracts for 20 years or more. With growing liquidity of gas markets, we see more and more hybrid price links both to oil and gas. And spot sales in 2021, the share of spot and medium-term sales reached over 40%. LNG continues to gradually move away from oil price lengths. Consumers want to have more flexibility, that's why the share of spot is on the rise and the term of contracts is going down. We are ready for this change. And very importantly, next year, we will launch our transshipment terminals and at Kamchatka and they will ensure the base is both for a spot gas price. And as you probably know, both August and plus are already publishing the quotes. Most importantly, they will ensure physical deliveries of cargoes to the market where our transshipment terminals are closest to. Thank you.
Operator: Thank you. We will now take our next question from Alex Comer from JPMorgan. Please go ahead. Your line is open.
Alex Comer: Hello, guys. Thanks for the asked question. Just looking at Obsky and the blue ammonia project for a second, that's obviously a similar project in the industry. And it's very important that the carbon capture storage element of that works. So I was just wondering, if you look at the capacity for carbon or CO2 storage that you have, it's way bigger than you're likely to need for a long period of time from that plant. So do you envisage storing for other people? And how might the economics of that work? And can you give us any early estimates of what the storage cost might be at that location? Thanks.
Leonid Mikhelson: That is a very good question. And in the speech, it was mentioned specifically going to the part of your question that the -- for the 2 fields, the capacity was mentioned that passed the first stage of certification at 600 million tons for a capture project, it also deals a little bit with this strategy. This is an integral part of decarbonizing our operations, both for the planned ammonia plant and our existing facilities for LNG. We obtained the 2 licenses in Yamal and Gydan. We launched the certification to make sure that this is internationally recognized. The fields are located in the immediate vicinity of our existing projects and it supports their economic feasibility. It is very important that the work has started to make necessary amendments to the big number of Russian laws and bylaws to ensure full-scale regulation of CCS project, including the right to place CO2 in geological formations, licensing, monitoring of condition of those storage which is an important point and control actions. We are fully supportive of this work and we are involved ourselves in discussing and having these documents approved. This may be monetized through emission credits. We are serving that CCS projects will give us an additional competitive edge. First and foremost, you said correctly that this is about the ammonia project, blue ammonia and all of the CO2 from that project will be stored and reinjected. But beyond that, we can go into do this as a separate business. And looking at North Sea, our fields are even a better fit for that. Thank you.
Alex Comer: Thanks.
Operator: Thank you. [Operator Instructions] We will now take our next question from Henri Patricot from UBS. Please go ahead.
Henri Patricot: Yes, sir. I want to thank you for the update. I have 2 questions, please. The first one, just on the split of spot and the long-term sales in 2022. So pretty close on average to '21 level? And then should we expect any fluctuations on a quarterly basis because that did fluctuate quite a bit in '21, so should we expect also something similar in '22? And then secondly, following up on the topic of long-term contracts. We've seen a few more long-term contracts for Artic LNG recently. Should we expect more of these or you are happy with the share of spot sales that you have at the moment? Thank you.
Leonid Mikhelson: Well, when we were starting Yamal LNG to raise external finance, we contracted more than 90%. I highlight -- 90% of the nameplate capacity under long-term contracts and it's very good that taking into account Train 4, we are producing more than 20% more than the initial nameplate capacity of LNG and this gives us the opportunity to sell more volumes. With Arctic LNG 2, as was mentioned in the speech and as you knew from before, the project finance matters have been fully resolved and we have contracted the necessary quantity from Train 1 and we continue our contracting activities but we will plan by all means to maintain a significant part for the sports market. What I said before, the importance of our transshipment terminals in Murmansk and at Kamchatka, I believe that this would help us and would also give us a competitive advantage in the LNG market. Thank you.
Operator: Thank you. We will now take our next question from the Russian line from Andrey Gromadin from Sberbank CIB. Please go ahead. Your line is open.
Andrey Gromadin: Interpreted [ph] strategic question I would like to ask. The government has mentioned...
Leonid Mikhelson: Andrey could you please repeat the question?
Andrey Gromadin: Do you hear me now? I apologize.
Leonid Mikhelson: Yes, go ahead, please.
Andrey Gromadin: Well, I have a question which is more of a conceptual. The government considered several development options and options for allocation of the resource base in Yamal. Mr. Mikhelson, you mentioned as well that the company to achieve its strategic goals of growing LNG production would also need to expand its resource base. And recently in -- at this meeting with the President, it was mentioned that Novatek would be ready to ensure gas supplies to Kamchatka, if it gets certain reserves increment. Would you please comment what is the development scenario for Yamal gas industry is, to your opinion, the most probable one. I'm definitely most importantly interested in the Tambey group of fields. Thank you.
Leonid Mikhelson: Well, as you know, the President showed a decree on the Russian Arctic zone development strategy sets the goals for LNG production in that area. By 2030, it goes into 64 million tons; by 2035, it's about 90 million tons. Then there is the governmental decision approving the LNG market development program with the LNG production target by 2035 of 140 million tons. And you touched upon Kamchatka and if my memory doesn't fail me, the governor raised this point, the gas supply specifically and I would also make a bridge to our participation in delivering on those decrees and on those parameters and on gas supplies. We have made and submitted our proposals both to the government and to Gazprom as well. And in those proposals, we confirm that the company is ready to ensure necessary LNG supplies for the Kamchatka area provided that there is additional resource base secured for us to make new investment decisions on new projects, whereby we'll be able to achieve the target set in the presidential decree. And in parallel, gas supplies to Kamchatka will also be resolved. Thank you.
Andrey Gromadin: Thank you.
Operator: Thank you. We will now turn the call back to our speakers for closing remarks.
Leonid Mikhelson: Thank you for the questions. And I would like to also thank and I'm speaking Russian and all the questions were asked in Russian and it highlights how important Russia is for the global energy and gas markets. Novatek is developing in line with its strategy that was adopted. And let me remind you that today, we have around 18% of the Russian domestic market and we will maintain that level. We are commissioning additional processing facilities. We will soon start up the hydrocracker at Ust-Luga and this would generate additional returns for us from condensate production and processing. And most importantly, we have the LNG projects. And Alexander in his speech meant correctly, our main achievement in 2021 is that we maintained the pace of implementation of Artic LNG to many were forced to postpone and face issues. We are grateful to all of our partners, the engineering companies and our suppliers. All of them were finding options to solve. And as Alexander said, the last module would arrive tonight and in the first week of March, all of the necessary 14 modules for Train 1 will have been installed. And the platform out of dock events that is a landmark for us and it's telling to the field is going to take place this August with the start-up of Train 1 in 2023. So we have built the energy construction center and invested a significant amount of money in it and we take pride in setting up the plants that we'll be building the plants. Looking at these 3 GDS as an example, we see that every next train will be operating and performing better and will be cheaper. And I believe that this conveyor will run beyond 2030, 2035 or 2040. And probably the poor preparation for recovery rate and also how display and European community started to have a different look at LNG. And I believe that the development of it would accelerate and we are intending to become a significant contributor to this process. Thank you.
Operator: Ladies and gentlemen, that will conclude today's conference. You may now all disconnect.