Page 10 - FSUOGM Week 16 2022

FSUOGM PROJECTS & COMPANIES FSUOGM

Three Russian mega-projects stall

on sanctions woes

RUSSIA FEARS of being hit by secondary western sanc- was intended to monetize gas reserves on
tions and trouble raising financing are among the Sakhalin shelf as part of the Sakhalin-1
The projects are Amur the many problems facing a slew of Russian consortium.
Gas Chemical Complex, mega-projects that are increasingly being sus- "The project that the Americans announced –
Far Eastern LNG and a pended or stopped completely. Exxon – in the port of De-Kastri with a pipe from
railway development. Among the biggest victims is the $10bn Amur Sakhalin, it is frozen. Why this is being done – it
Gas Chemical Complex, a giant petrochemical amazes me! This is shooting yourself in the foot.
plant being jointly built by Russia’s Sibur and There is gas, there is a coast, labour resources and
China’s Sinopec. The deal was signed in Decem- investments there is, but they are freezing the
ber 2020 but the duo announced in April that project for political reasons," Mikhail Degtyarev,
they are “reconsidering” the implementation the region’s governor, said in a local interview.
of the plant that is already over a third finished Rosneft originally estimated that the plant
(37.8%) and was due to open in 2024. The prob- would create 5,000 jobs in the construction
lem is the partners are no longer sure it can be phase, 700 permanent positions when it was fin-
completed after the imports technical parts have ished and altogether generate RUB5 trillion for
been sanctioned. the local economy.
The project is 40% owned by Sinopec and Meanwhile, Sakhalin is also expected to suf-
worth $10bn. It is the largest investment pro- fer, as when both ExxonMobil and Shell leave
ject in the otherwise fairly depressed region gas projects there their own technology will be
and if it fails to go ahead that will harm the difficult to replace.
local economy. The plant itself is supposed to The Khabarovsk Territory has other big
supply polymers to the Chinese market, and investment projects going on, e.g. in the field of
become the largest factory of basic polymers logistics: if Russian coal exports pivot to China,
in the world, reports Andras Toth-Czifra, a the government will need to ramp up the mod-
Russia researcher. ernisation of railways and ports.
“While Sinopec has not abandoned the pro- Another megaproject that will at least require
ject, it has "paused" participation, which sug- adjustments is the Northern Latitudinal Railway,
gests that as long as there is a risk of secondary a project of the state-owned Russian Railways
sanctions, it won’t be finished,” says Toth-Czifra. (RZhD) and the state-owned Gazprom, which
“This will not only impact jobs in the region but would connect the Yamal Peninsula with North-
also Gazprom’s local plant, to which the new western Russia through the Urals, and which was
complex is connected.” expected to open in 2023.
Another frozen megaproject is Far East LNG, The project is part-funded by the RZhD, the
a $4.2bn project by the state-owned oil major National Welfare Fund and the Yamal-Nenets
Rosneft and US oil company ExxonMobil. This AO’s budget and concessions. But in March
project was also suspended in April after Exxon it turned out that there’s a financing gap of
withdrew from Russia. RUB250bn, even after reallocating RUB50bn of
The project is connected to gas extraction in infrastructure loans, reports Toth-Czifra.
Sakhalin, but the plant itself was planned to be The railway is considered a key part in the
located in the Khabarovsk Territory and due to development of the energy industry of Eastern
go online in 2028 Siberia, the Arctic (including the Northern Sea
Exxon Neftegaz Ltd (ENL, a subsidiary of Route), to unburden the Trans Siberian Rail-
ExxonMobil, operator of the Sakhalin-1 project) way (an essential logistics challenge) and ensure
launched a tender campaign in February to select more reliable delivery of goods to the regions.
contractors for the Far East LNG project. The “But with technology exports limited and
company announced the search for contractors the future of projects (e.g. Novatek’s Yamal LNG
to assess the quality of building materials, as well project) hanging in the balance, it is unclear if
as the search for manufacturers of reinforced the development of the Northern Sea Route
concrete products. will even go ahead as planned – and that will
The construction of an LNG plant with have repercussions in northwest Russia too,”
a capacity of 6.2mn tonnes per year (tpy) Toth-Czifra said. ™

P10 www. NEWSBASE .com Week 16 21•April•2022