Page 5 - GLNG Week 37 2021

GLNG COMMENTARY GLNG

Rival Novatek has
moved far more quickly
than Gazprom to
develop LNG projects in
Russia.

development drive by Gazprom. The company technology at a fourth mini-train undergoing
is also working with Rusgazdobycha on devel- commissioning at the Yamal LNG plant. Its
oping several large wet gas fields in Western launch has been delayed repeatedly.
Siberia that will supply the gas for the plant.
Development drilling began at the largest of Catching up in LNG
these fields, Semakovskoye, in May last year. The Gazprom is already involved in LNG produc-
plant will meanwhile provide substantial gas tion on Sakhalin Island in the Russian Far East.
volumes for Gazprom’s Nord Stream 2 pipeline, The Sakhalin LNG plant produces more than
where construction was announced as complete 10mn tpy of LNG, most of which is sold in Asian
on September 10. markets.
“With European gas prices setting new record While Gazprom is the facility’s main share-
highs on an almost [daily] basis, we think holder, it was its partner Shell that carried the
investors are likely becoming more positively project through key stages of development. Gaz-
inclined towards this project,” BCS GM analyst prom only joined the project in 2007, two years
Ronald Smith said. before its launch.
Gazprom is yet to lead a successful LNG pro-
Tech progress ject in earnest. Analysts have attributed this to
In its statement, Gazprom said the liquefaction a lack of focus, as most of Gazprom’s attention
plant would use a technology patented in Rus- has been on expanding pipeline gas exports, as
sia, noting that itself and Linde were the patent well as weaker project management ability. The
holders. company has built up a reputation for cost over- Gazprom is yet to
Gazprom and other Russian oil and gas runs, as were seen at its Power of Siberia pipeline
companies have taken steps in recent years to project to China. lead a successful
reduce their reliance on foreign equipment and In contrast, Novatek has moved ahead dra- LNG project in
technology, as part of a national localisation matically quickly with its LNG projects in Rus-
drive that began after relations with the West sia’s far north. It launched its first liquefaction earnest. Analysts
collapsed in 2014. But progress has been slow, project, the 17mn tpy Yamal LNG plant, in
with the share of local products in new projects December 2017 and had taken a final invest- have attributed
generally falling below quotas. A key focus has ment decision (FID) on its second, the 20mn tpy
been on localising technology in the LNG field, Arctic LNG-2, less than two years later. this to a lack of
which would help shield the critical sector from Novatek has several more LNG schemes in focus.
a potential tightening of international sanction the pipeline, and is targeting up to 70mn tpy of
regimes in the future, while also providing a annual supply by the end of this decade.
boost to Russian manufacturing. Gazprom expanding in the LNG arena is
Gazprom is not the first Russian company to likely good news for the company’s business
announce its own liquefaction technology. First model, which is heavily reliant on pipeline
was Novatek, which developed its own pro- gas sales to Europe. That heavy reliance is
prietary Arctic Cascade technology that takes generating Gazprom record profits at pres-
advantage of low ambient temperatures in the ent, on the back of the spike in European gas
Russian Arctic to reduce costs. prices in recent months. But it also leaves the
It remains to be seen how effective Arctic company exposed at times when the global
Cascade is, however. Novatek is trialling the gas market is bearish.™

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