Page 7 - FSUOGM Week 44 2019

FSUOGM PIPELINES & TRANSPORT FSUOGM
Sakhalin LNG expansion reportedly on hold
RUSSIA
Gazprom does not have any gas resources available to support the expansion.
RUSSIA’S Gazprom has frozen plans to expand its Sakhalin LNG export terminal in the Far East because of a lack of available gas resources, Reuters cited sources as saying on November 1.
The company is partnered with Shell and Japan’s Mitsui and Mitsubishi at Sakhalin-1, which was Russia’s first LNG export plant to enter operations a decade ago. Gazprom has struggled to advance similar projects, with its planned Baltic LNG venture facing delays after the recent pull-out by Shell.
The Sakhalin-1 consortium has been discuss- ing plans to add a third 5mn tonne per year train to their 10mn tpy terminal for years, with lim- ited progress achieved. The plan is now on hold indefinitely as Gazprom does not have the spare gas resources in the area to support it, sources told Reuters.
Sanctions have also been a factor, with the US in 2015 blacklisting Gazprom’s Yuzhno-Ki- rinskoye project – a field off Sakhalin Island that the company estimates to hold 711.2bn cubic
metres of recoverable gas – enough to underpin an annual supply of 21 bcm. The sanctions have effectively brought the project to a halt.
Gazprom had been discussing the purchase of gas from the Rosneft-led Sakhalin-2 consor- tium, but that group is now planning to develop its own LNG terminal instead.
Gazprom has found another gas field in the region, Yuzhno-Lunskoye, but its resources are not enough to support the expansion project alone.
As LNG continues to be Gazprom’s weak spot, domestic peer Novatek has almost caught up with state oil and gas majors in terms of capi- talisation after adopting and successfully carry- ing out an ambitious LNG strategy.
The government is also reportedly consid- ering opening up LNG exports to more players developing projects in the Arctic, while Gaz- promhas cried foul in the past arguing that LNG exports threaten its market position in Europe. Russia’s goal is to grow the global LNG market share to 20% by 2035.™
Financing secured for Russia’s first locally-built LNG tanker
RUSSIA
The vessel is expected to be the first in a fleet of 15 Russian-built LNG carriers.
FINANCING is now in place for the develop- ment of Russia’s first domestically-built LNG carrier, as Moscow pushes ahead with its import substitution drive.
A deal has been finalised for state develop- ment bank VEB.RF to fund the construction of a pilot Arc7 icebreaking LNG tanker, the lender said on November 1. The agreement was reached with the Zvezda shipyard in the Far East, which will manufacture the vessel, and state shipping group Sovcomflot, which will be its owner. Sovcomflot has also reported signing a contract to lease the ship out to Russia’s top LNG pro- ducer Novatek.
The Russian government embarked on an ambitious import substitution drive after the introduction of international sanctions in 2014. One area of the country’s oil and gas industry that is heavily-import reliant is LNG. Novatek has depended mostly on Western technology and equipment to advance its LNG export pro- jects in the Arctic, while ordering vessels from Asia-Pacific shipyards to ship their production to markets.
A centrepiece in Russian efforts to expand domestic shipbuilding is the Zvezda yard, a joint venture between national oil company Rosneft and state lender Gazprombank. Novatek has so far appeared reluctant to place any firm orders
for vessel construction at the site, but in Septem- ber, it struck a similar deal with Sovcomflot to jointly operate a fleet of LNG carriers, supplied from the shipyard.
The new pilot LNG carrier is expected to be first in a series of 15 such vessels that will be built by Zvezda and serve Novatek’s Arctic LNG-2 export terminal. Their delivery will be timed to coincide with the project’s launch in 2023. VEB. RF has given an initial nod to fund the construc- tion of all 15 ships, which Russia’s Kommersant estimates will cost $5bn, but firm contracts need to be agreed first. According to the newspaper, a funding deal should be reached for a further four vessels by the end of the year.
Novatek is also looking to overcome its reli- ance on foreign tech in LNG production, hav- ing developed its own liquefaction technology known as Arctic Cascade, which takes advantage of freezing Arctic temperatures to make the pro- cess more efficient.
The company is piloting Arctic Cascade’s use at a fourth 0.9mn tonne per year LNG train at Yamal LNG, due to come on stream by the end of this year. If tests are successful, it will also deploy it at Obsk LNG, a planned 5mn tpy LNG termi- nal on the Gydan Peninsula. A final greenlight on Obsk LNG’s development is expected by mid- 2020. ™
Week 44 06•November•2019 w w w . N E W S B A S E . c o m P7