Page 11 - GLNG Week 03 2021

GLNG COMMENTARY GLNG

Russian LNG output could reach

100mn tpy by 2035: Vostok Capital

Russia is set to supply 20% of the global LNG market by 2035, despite pandemic-
related setbacks

PERFORMANCE RUSSIAN LNG production is on track to reach proprietary Arctic Cascade liquefaction tech-
as much as 100mn tonnes per year (tpy) by 2035, nology for the first time. Russia is on a drive to
WHAT: according to research by Moscow-based Vostok localise oil and gas equipment manufacturing
Russia’s three biggest Capital, despite some pandemic-related project and technology, in order to overcome reliance
gas producers are delays. This forecast is closer to the bottom end on imports. Novatek has been mute on the
advancing a raft of new of the lofty prediction in Russia’s latest energy reasons for the train’s delay, although the Mos-
LNG export projects. strategy published in April 2019, which saw sup- cow-based Kommersant newspaper reported
ply ranging between 80mn and 140mn tpy in 15 last year that there had been an error in the
WHY: years’ time. design of its pipelines.
While they have delayed Emboldened by the success of its Yamal LNG The pandemic and resulting slump in interna-
some of these projects terminal launched in 2017, Novatek is develop- tional gas prices were likely contributing factors
in light of the pandemic ing a raft of new export projects in the Russian to the train’s postponed commissioning. Its vol-
and low gas prices, many Arctic. With this extra supply, Russia is set to umes are destined for the spot market, Novatek
other producers have control up to 20% of the global LNG market by CFO Mark Gyetvay said in December.
taken similar steps. 2035, Vostok said. If Arctic Cascade performs as expected,
Russian output amounted to 27.6mn tonnes Novatek will use the technology at another,
WHAT NEXT: from January to November, according to state 5mn tpy export plant known as Obsky LNG.
Russia’s low costs statistics, up 3.7% year on year. Most of this The company intends to develop Obsky LNG
give it an edge in the supply comes from Yamal LNG, on the Arctic without foreign partners, but deferred taking
competition for market Yamal Peninsula, and the Sakhalin LNG ter- an FID from 2020 until 2021 because of mar-
share, but the country is minal operated by Gazprom in the Russian Far ket volatility. Gyetvay said in November that
vulnerable because of East. pre-front-end engineering and design (FEED)
its heavy dependence on Gazprom and state oil company Rosneft are work on the project was still ongoing, noting
foreign equipment and developing their own projects elsewhere, but that Novatek was considering some changes to
technology. the Russian Arctic is where the country’s main its parameters.
LNG potential lies. Vostok expects Russian Arc- Novatek is also working on a third Arctic
tic LNG supply to reach 43mn tpy by 2024 and export project Arctic LNG-1, which will be
64mn tpy by 2030. located in the Yamalo-Nenets region of West- While Arctic LNG-
This suggests that Novatek’s own target of ern Siberia. Its anticipated production capacity
70mn tpy of supply within a decade is too ambi- is 20mn tpy. 2 may remain on
tious. The company took a final investment Russian engineering firm InjGeo won a ten- track, Novatek’s
decision (FID) on its second major LNG pro- der for engineering and geological explora-
ject Arctic LNG-2 in September 2019. It said tion for the project in December last year. The other upcoming
as recently as November that the terminal was exploration phase is due to run until May 2021.
on track for first gas in 2023, despite the pan- Novatek also wants to build the similarly-sized projects have
demic. At full capacity it will produce 19.5mn Arctic LNG-3 terminal, but that project is still
tpy of super-cooled gas, surpassing Yamal LNG’s on the drawing board. incurred delays.
17mn tpy output.
Gazprom, Rosneft ventures
Novatek delays While Novatek is the frontrunner in Russian
While Arctic LNG-2 may remain on track, LNG, Rosneft and Gazprom are crafting their
Novatek’s other upcoming projects have own plans.
incurred delays. A fourth, 0.9mn tpy train at Rosneft wants to develop on 6.2mn tpy plant
Yamal LNG had been due to start up in late 2019 in the Far Eastern region of Khabarovsk, with
but its launch has been repeatedly pushed back. capital expenditure estimated to be $9.8bn. It
Novatek said in December that the facility would will be supplied by fields controlled by the Ros-
be up and running in Q1 2021. neft-led Sakhalin-1 consortium.
Despite its small size, the train is neverthe- Rosneft is joined at Sakhalin-1 by ExxonMo-
less important, as it will showcase Novatek’s bil, Japan’s Sodeco and India’s ONGC Videsh

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