Page 4 - GLNG Week 37 2021

GLNG COMMENTARY GLNG

Gazprom pushes forward with

$13bn Baltic LNG project

Gazprom is set to become a serious player in Russian LNG, with a liquefaction

project on the Baltic shore now looking likely to be realised

PROJECTS & RUSSIAN gas supplier Gazprom has awarded limited success. It had wanted to develop a
COMPANIES an engineering procurement and construction plant with Royal Dutch Shell, but after years of
(EPC) contract for the $13bn LNG complex it is stunted progress, the Anglo-Dutch major pulled
WHAT: developing on the Baltic Sea, bringing the ambi- out of the plan in 2019, after Gazprom changed
Gazprom has awarded an tious project one step closer to realisation. the project’s scope to include processing facili-
EPC contract for a $13bn Despite its status as Russia’s top gas producer ties and brought on board Rusgazdobycha as a
LNG complex. and top gas exporter, Gazprom has struggled to partner. Rusgazdobycha has ties to Russian bil-
expand in the LNG arena. This contrasts with lionaire Arkady Rotenburg, who was placed on
WHY: the success of independent producer Novatek, a US sanctions blacklist in 2014 because of his
The plant will produce which is developing one of the world’s largest close ties to the Kremlin.
13mn tpy of LNG at full hubs for LNG in the Russian Arctic. It hopes to There were concerns that the project in its
capacity. close the distance with Novatek by developing new guise was also floundering, after Gazprom
the Ust-Luga complex on Russia’s north-west and Rusgazdobycha cancelled an EPC award to
WHAT NEXT: coast, which would allow Gazprom to target Russian contractor Nipigaz in March this year.
Analysts say the contract gas markets beyond those it can supply with its The Moscow-based RBC news agency reported
award means the project many export pipelines. at the time that Nipigaz had repeatedly missed
now looks set to be Gazprom and its project partner Rusgazdo- project deadlines. But Nipigaz said the project’s
realised. bycha announced on September 9 they had developers had not agreed on a financing model,
awarded the EPC contract for the 13mn tonne while also pointing to “discrepancies” in the
per year (tpy) Ust-Luga liquefaction plant to project’s risk assessment, and how risks should
a joint venture between Germany’s Linde and be shared between customer and contractor.
Turkey’s Renaissance Heavy Industries. In light of the new EPC award, however, ana-
The Ust-Luga complex will handle 45bn cubic lysts are now confident that the Ust-Luga com-
metres per year of gas in total, producing, in plex will be built.
addition to LNG, 19 bcm of gas ready for pipe- “This project is actually going to happen,” ana-
line transport to Europe, as well as 3.6mn tpy lysts at BCS Global Markets said in a research
of ethane and 2.2mn tpy of LPG. Some of these note on September 10. “The concept of an LNG
liquids will be used as feedstock at a nearby pet- plant at Ust-Luga has been in discussion for at
rochemicals plant that Rusgazdobycha is devel- least 15 years, and as such the concept has been
oping on its own. treated with some scepticism of late. However,
Gazprom has been trying to move an LNG it now appears set to become reality.”
project on the Baltic Sea for many years, with The Ust-Luga project is part of a broader

P4 www. NEWSBASE .com Week 37 17•September•2021