The agreement, reached at the St Petersburg International Gas Forum on October 3, should help Gazprom obtain the technology it needs for a gas processing and LNG complex it plans to build on the Baltic Sea. The new joint venture will develop technological, design and engineering documentation for gas processing and LNG production facilities, Gazprom said in a statement. It will also provide servicing during the commissioning and operation of LNG plants.
Gazprom has lagged behind its rival Novatek in developing LNG. But now the mega-projects of building the Nord Stream 2 and Turkish Stream pipelines are coming to an end (both are due to be completed by the end of this year) the gas company is looking for new projects that will further develop Russia’s energy infrastructure. Portfolio investors complain that while Gazprom makes a lot of money, it always takes any free cash flow it has and ploughs it into the ground with new projects. “It will never stop building,” one investor complained to Newsbase.
Gazprom’s only export plant in operation is a 10-11mn tonne per year facility on Sakhalin Island, where it is partnered with Royal Dutch Shell. Gazprom had also been working with Shell on a plan to build another LNG terminal by the Baltic Sea. The oil major quit the project in April, after Gazprom adjusted the scheme to include gas processing facilities as well and brought on board a domestic partner RusGazDobycha. RusGazDobycha is affiliated with sanctioned Kremlin stoligarch Arkady Rotenberg.
Shell’s exit meant Gazprom no longer had access to international liquefaction technologies. The company chose Linde as a supplier for these technologies shortly after Shell’s decision, sources told Reuters back in April.
Gazprom also wants to build a trio of smaller-scale LNG plants next to the Baltic Sea, the Black Sea and on the coast of the Russian Far East. The company started building the 1.5mn tpy Portovaya plan in the Leningrad region in 2016 and aims to launch production in 2020, it said in a presentation at the St Petersburg International Gas Forum on October 2.
Gazprom has completed a feasibility study on another 1.5mn tpy terminal in Vladivostok, and aims to take a decision on a 0.5-1.5mn tpy facility on the Black Sea shore “hopefully soon”, according to the presentation.
These plants will primarily serve as stations for LNG bunkering – a sector that is expanding rapidly as a result of new IMO sulphur emissions limits due to come into force next year.
This article is from Newsbase’s FSUOGM monitor, a bne IntelliNews sister company that produces weekly reports on the oil and gas sector in the former Soviet Union countries.
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