Page 7 - FSUOGM Week 18

FSUOGM COMMENTARY FSUOGM
Private investor mulls $10bn LNG
project in Russian Far East
The project aims to monetise stranded reserves in the remote region of Yakutia
RUSSIA
WHAT:
A Russian investment group wants to build a 13mn tpy LNG export terminal in the Russian Far East.
WHY:
The project’s developer wants to take advantage of Russia’s loosening of LNG export restrictions.
WHAT NEXT:
The project faces
an uphill struggle given current market uncertainty.
A private Russian investment group has revealed plans to invest $10bn in an LNG export project in Russia’s remote Far Eastern region of Yakutia.
e announcement comes a er Russia’s gov- ernment passed legal amendments last month allowing more projects to export LNG – a move aimed at helping the country reach lo y goals for expanding LNG production over the com- ing decades.
A-Property, owned by Russian-Armenian telecommunications magnate Albert Avdolyan, intends to build a terminal on the Sea of Okhotsk capable of exporting 13mn tonnes per year (tpy) of LNG, Russia’s RBC reported on May 5, citing the group’s representative. First gas is expected in 2025, the newspaper said.
London-headquartered energy services rm TechnipFMC has been hired to design the plant, the spokesperson said, and will nish this task by the end of the year. As of press time, Technip- FMC had not con rmed the deal.
Gas from the LNG terminal will come from elds in western Yakutia operated by Yakutsk Fuel and Energy (YATEC). A-Property acquired the indebted gas producer last year from bil- lionaire Ziyavudin Magomedov, who was jailed in 2018 on charges of racketeering and embezzlement.
A-Property estimates the project’s price tag at over $10bn. is sum will be spent on devel- oping YATEC’s reserves, with a goal of raising the company’s output from a mere 1.7bn cubic
metres last year to more than 20 bcm. It will also go towards construction of processing facilities, a 1,300-km pipeline to bring gas to the coast, and development of the export terminal.
e investment group has not disclosed how it intends to raise these funds.
Finding a market
Yakutia, home to Gazprom’s giant Chayandin- skoye gas eld, is estimated by Russian geolog- ical surveys to hold as much as 14 trillion cubic metres of initial gas in place. But infrastructure is scarce and the local market for gas is limited, making development a challenge.
Under Russian legislation, only Gazprom is permitted to export gas via pipeline, prevent- ing YATEC and other producers in the region from using the Power of Siberia to ship supplies to China. Independent producers have lobbied for years for this restriction to be li ed, without success.
Russia has recently taken steps to liberalise LNG exports, however, and A-Property is look- ing to exploit this opportunity.
e government passed legal amendments last month, loosening restrictions on the num- ber of projects permitted to export LNG. Origi- nally Gazprom also had a monopoly over LNG exports, but Moscow changed the rules in 2013 to allow operators with subsoil licences issued before January 1, 2013 to sell LNG abroad as well, as long as those licences provided for the
Week 18 06•May•2020 w w w . N E W S B A S E . c o m P7