Page 9 - GLNG Week 44

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Financing secured for Russia’s first locally built LNG tanker
INVESTMENT
FINANCING is now in place for the develop- ment of Russia’s first domestically built LNG carrier, as Moscow pushes ahead with its import substitution drive.
A deal has been finalised for state develop- ment bank VEB.RF to fund the construction of a pilot Arc7 icebreaking LNG tanker, it said on November 1. The agreement was reached with the Zvezda shipyard in the Far East, which will manufacture the vessel, and state shipping group Sovcomflot, which will be its owner. Sovcomflot has also reported signed a contract to lease the ship out to Russia’s top LNG pro- ducer, Novatek.
The Russian government embarked on an ambitious import substitution drive after the imposition of international sanctions in 2014. One area of the country’s oil and gas industry that is heavily import-reliant is LNG. Novatek has depended mostly on Western technology and equipment to advance its LNG export pro- jects in the Arctic, while ordering vessels from Asia-Pacific shipyards to ship their production to markets.
A centrepiece of Russian efforts to expand domestic shipbuilding is the Zvezda yard, a joint venture between national oil company Rosneft and state lender Gazprombank. Novatek has so far appeared reluctant to place any firm orders
for vessel construction at the site, but in Septem- ber it struck a similar deal with Sovcomflot to jointly operate a fleet of LNG carriers, supplied from the shipyard.
The new pilot LNG carrier is expected to be first in a series of 15 such vessels that will be built by Zvezda and serve Novatek’s Arctic LNG-2 export terminal. Their delivery will be timed to coincide with the project’s launch in 2023. VEB. RF has given an initial nod to fund the construc- tion of all 15 ships, which Russia’s Kommersant estimates will cost $5bn, but firm contracts need to be agreed first. According to the newspaper, a funding deal should be reached for a further four vessels by the end of the year.
Novatek is also looking to overcome its reli- ance on foreign tech in LNG production, hav- ing developed its own liquefaction technology known as Arctic Cascade, which takes advantage of freezing Arctic temperatures to make the pro- cess more efficient.
The company is piloting Arctic Cascade’s use at a fourth 0.9mn tonne per year LNG train at Yamal LNG, due to come on stream by the end of this year. If tests are successful, it will also deploy it at Obsk LNG, a planned 5mn tpy LNG termi- nal on the Gydan Peninsula. A final greenlight on Obsk LNG’s development is expected by mid-2020.™
Russia’s Gazrom said to freeze Sakhalin LNG expansion plans
PERFORMANCE
RUSSIAN natural gas giant Gazprom is freezing the development of Sakhalin LNG project owing to the lack of the necessary gas resource base, Reuters said on November 1 citing unnamed sources close to the company.
The company operates its only one LNG plant in Sakhalin and is facing delays in the planned Baltic LNG project after the recent pull-out by Royal Dutch Shell.
Reportedly, Russia’s first LNG plant in Sakha- lin, with 10mn tonnes per year (tpy) of capacity, has to freeze the third stage of the project, which had previously been planned to deliver another 5mn tpy by 2021.
The project is a joint venture also involving Royal Dutch Shell and Japanese firms Mitsui and Mitsubishi.
The problem is the resource base required
for the expansion. One of the options was pur- chasing the gas from another Sakhalin project, Sakhalin-1, operated by state oil major Rosneft and ExxonMobil, but the companies reportedly need the gas for their own LNG plant in the Far East.
As LNG continues to be Gazprom’s weak spot, domestic peer Novatek has almost caught up with state oil and gas majors in terms of capi- talisation after adopting and successfully execut- ing an ambitious LNG strategy.
The Russian government is also reportedly considering opening up LNG exports to more players developing the projects in the Arctic, while Gazprom in cried foul in the past arguing that LNG exports threaten its market position in Europe. Russia’s goal is to grow the global LNG market share to 20% by 2035.™
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