Page 7 - GLNG Week 03 2022

GLNG COMMENTARY GLNG

sufficiently to justify the LNG terminal. The that Sibur wants to build in the Amur region.
facility will initially comprise two trains with a Sinopec and China’s Silk Road Fund hold 10%
combined output of 8.7mn tpy. Two more larger shares each in Sibur, while another Chinese
trains will be added at a later stage, ramping up investor CEFC has a 14% stake in Rosneft.
production to 18mn tpy.
The problem is that YATEC’s fields are all What next?
located in the west of the Yakutia region, far While attracting the interest of a key Chinese
away from the coast. The company therefore gas importer like Zhejiang is certainly a sign of
plans to build a 1,300-km pipeline to connect progress for Yakutsk LNG, it must be cautioned
its resources with the project site. The LNG will that the project is still at a relatively early stage
be delivered to markets across Asia, but as the of development. YATEC is yet to award a front-
deal with Zhejiang indicates, the main focus is end engineering design (FEED) study, and by its
China. own admission, there is considerable explora-
tion work yet to be done. The company said last
Targeting China year its goal was to expand its reserve base from
“The Asian-Pacific countries are the target sales 390 bcm at present to more than 1 trillion cubic
direction for the company as part of our long- metres in order to underpin the project. There are also
term strategy,” Avdolyan said in a statement. There are also reasons why only Russia’s larg-
“The Chinese gas market is one of the most est gas majors have so far managed to progress reasons why only
promising and fastest growing. Following the projects. They can face lower regulatory hur- Russia’s largest
climate agenda, our LNG will be one of the most dles and can wield their substantial influence
environmentally friendly in the industry, which in Moscow to secure financial and other sup- gas majors have
fits into China’s strategy of achieving carbon port. It is questionable whether Yamal LNG, for
neutrality by 2060.” example, would have gone ahead without the so far managed
YATEK is seeking to follow in the footsteps of substantial tax breaks afforded by the govern-
Novatek, which has struck a raft of LNG export ment, not to mention its funding for necessary to progress
deals with Chinese partners over the years. infrastructure. projects.
Most recently, it signed agreements earlier this It is clearly in Moscow’s interest to remove
month to deliver 1mn tpy of LNG to Zhejiang these barriers to entry and allow a larger pool
and 0.6mn tpy to China’s ENN. of investors to develop LNG. Russia wants to
Zhejiang’s potential investment in Yakutsk be producing as much as 140mn tpy of LNG
LNG would also mark a further expansion of by 2035, which could make it the largest
China’s footprint in the Russian oil and gas sec- exporter in the world. But it seems unlikely
tor. Chinese companies are already involved in that the country’s leading gas firms will be
Novatek’s Yamal LNG and Arctic LNG-2 pro- able to reach anywhere near this target on
jects, and also hold shares in various Russian oil their own. As such, liberalisation is needed to
and gas fields. China’s Sinopec has also recently get as many competent developers working
agreed to invest in a large chemicals complex on projects as possible.™

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