Page 6 - FSUOGM Week 04 2020

FSUOGM PIPELINES & TRANSPORT FSUOGM
Yamal LNG’s fourth train faces delays
RUSSIA
All Yamal LNG’s other trains were completed on or ahead of time.
RUSSIA’S Novatek has delayed the launch of the fourth train of its Yamal LNG plant in the Rus- sian Arctic, marking a setback in the company’s ambitious growth plans.
The $27bn Yamal LNG project took the market by surprise in December 2017, starting operations on time and on budget despite low oil prices and the US imposing sanctions on Novatek. Its second 6.5mn tonne per year (tpy) train was completed in July 2018, six months ahead of schedule.
The third train was commissioned in Decem- ber of that year, some 12 months early, raising its liquefaction capacity to 16.5mn tpy.
Novatek and its partners – France’s Total and China’s state-backed CNPC and Silk Road Fund – then drew up plans to build a fourth train, capable of exporting 0.9mn tpy of LNG. While small in size, the project is nevertheless a priority for Novatek, as it will employ the company’s very own liquefaction technology, Arctic Cascade, for the first time.
In contrast, Yamal LNG’s three existing trains run on technology supplied by US-based Air Products, while its next major LNG export pro- ject, the 19.8mn tpy Arctic LNG-2 that is due to start up in 2023, will use technology provided by Germany’s Linde.
Novatek developed Arctic Cascade as part of broader efforts to localise production of key equipment and technology, shielding its busi- ness from potentially stricter US sanctions in the future. Patented by Novatek two years ago, Arctic Cascade takes advantage of the cold Arc- tic climate to make the liquefaction process more efficient.
The fourth train was initially due to come online in late 2019 or early 2020. However, its launch is now anticipated sometime between March and June, Novatek CEO Leonid Mikhel- son told reporters at the World Economic Forum in Davos on January 23, according to Russia’s Prime news agency.
“We will launch commissioning work in the month of March; in the first half of this year we will launch it,” Mikhelson was quoted as saying.
While Novatek has not provided a reason for the delay, Russia’s Kommersant has pointed to a design error. Citing sources, the newspaper claimed that gas-processing pipelines installed at the train had not been designed to handle gas with such a low temperature. They have had to be replaced with pipelines resistant to colder temperatures.
The mistake was made by Moscow-based Nipigaz, which served as the train’s gen- eral designer. The project is expected to loss RUB900mn ($14.5mn) in revenues each month its launch is delayed, according to Kommersant.
The setback could have a knock-on effect on the implementation schedule for Novatek’s third large-scale export project, Obsk LNG. The 5mn tpy plant, which will also employ Arctic Cascade, is due to start up in 2023. Novatek had planned to take a final investment decision (FID) on the project in the second half of this year, after assessing Arctic Cascade’s effectiveness at Yamal LNG.
Novatek is drawing up plans for additional export plants in the Arctic, having set a goal of producing more than 70mn tpy of LNG from the region by 2030. ™
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w w w. N E W S B A S E . c o m Week 04 29•January•2020