Page 12 - FSUOGMWeek352019
P. 12
FSUOGM POLICY FSUOGM
VEB backs Gazprom’s Baltic gas hub plan
RUSSIA
Prime Minister Dmitry Medvedev says the project is too big and expensive to go ahead without state support.
RUSSIA’S top development bank VEB has pledged up to $1.7bn in support for a major gas processing complex state-owned Gazprom is developing on the Baltic Sea.
VEB is currently the project’s only nancier besides Gazprom, the bank’s chairman Igor Shu- valov said on August 29 a er a meeting of its supervisory board.
“We must prepare the project so that it is attractive to other investors and other lenders,” he was quoted as saying in a government press release. VEB itself will commit up to RUB111bn ($1.7bn) in investment, he said.
Gazprom and its private partner RusGazDo- bycha sanctioned the RUB700bn project at the port of Ust-Luga in late March. Due on stream in 2023, the proposed complex will annually pro- cess up to 45bn cubic metres of gas and produce 13mn tonnes of LNG, 4mn tonnes of ethane, more than 2.2mn tonnes of lique ed petroleum gas (LPG) and 20 bcm of treated gas.
e ethane will serve as feedstock at a nearby petrochemical plant RusGazDobycha plans to develop, in order to produce up to 3mn tonnes per year (tpy) of polymers. e LNG and LPG will be loaded onto tankers for export, whereas
processed gas will presumably be piped to Europe via the Nord Stream 2 pipeline. Now more than 75% complete, Nord Stream 2 will pump up to 55 bcm per year of gas from Ust-Luga under the Baltic Sea to Greifswald in Germany.
Prime Minister Dmitry Medvedev, who also attended VEB’s board meeting, said the state needed to take an active role in the Baltic gas complex’s development.
“It’s big and expensive,” he said. “[ e pro- ject] certainly requires careful attention from the state, taking into account that this project cannot kick o without it.”
Gazprom had been working with Royal Dutch Shell to develop a 10mn tpy LNG export terminal at Ust-Luga. Shell quit the venture a er Gazprom’s partnership with RusGazDobycha was announced. RusGazDobycha is affiliated with Kremlin ally Arkady Rotenburg, who has been blacklisted under US sanctions against Russia.
VEB’s planned investment comes a er Gaz- prom chairman Alexei Miller wrote a letter to Medvedev earlier this month requesting that the Baltic project be given the status of “having national importance to the economy.”
PROJECTS & COMPANIES
Gazprom liquidates Shtokman gas venture
RUSSIA
Shtokman is one of the world’s largest offshore gas nds.
THE board of Russia’s Gazprom has approved the liquidation of Shtokman Development, a Swiss-based subsidiary set up more than a dec- ade ago to bring in foreign investors to develop a supergiant o shore Arctic gas discovery.
Shtokman was discovered by Soviet geolo- gists in 1987 some 600km north-east of Mur- mansk in the Barents Sea, in water depths of up to 340 metres. One of the world’s largest o - shore gas nds, Gazprom estimates the eld’s C1 resources at 3.9tn cubic metres.
Gazprom brought on board France’s Total and Norway’s Equinor to help develop Shtok- man in 2007, establishing Shtokman Develop- ment a year later. e group had planned to take a nal investment decision (FID) on a $15bn development plan in 2009, and launch gas pro- duction in 2014. e project was to involve the construction of a 7.5mn tonne per year (tpy) LNG export terminal.
e partners were unable to agree on devel- opment terms, however. Part of the issue was the harsh operating environment at Shtokman and its remote location. e eld’s gas had also been intended for the US market, but the shale gas rev- olution in Texas and North Dakota put an end
to this option. Equinor transferred its 24% stake in Shtokman Development back to Gazprom in 2012.
e nal nail in the co n came in 2014, when US and EU authorities imposed sanctions pre- venting companies from developing deepwater o shore elds in the Russian Arctic. A year later Total also exited the project, relinquishing its 25% interest.
Explaining their decision to liquidate Shtok- man Development, Gazprom’s board said on August 30 it no longer made sense to keep the Swiss-based rm given the lack of foreign participation.
Gazprom’s future plans at Shtokman are unclear. In a revised o shore strategy in 2017, the company suggested that the eld could enter production in 2028. But it is doubtful this time- frame can be kept, as the company would need foreign equipment and technology to realise the project, given Russia’s limited domestic capabil- ity, and sanctions prevent this.
According to Gazprom’s website, Shtokman could produce 23.7 bcm per year in its rst phase of development, 47.4 bcm in its second phase and 71.1 bcm in its third and nal phase.
P12
w w w . N E W S B A S E . c o m Week 35 04•September•2019
