Russia starts a massive gas project in the Arctic

11/12/2017 16:12 LNG


Russia started its Yamal gas unit, a huge project in one of the most isolated regions in the world, as this is becoming more accessible because of climate change.

Novatek, the Russian gas producer, has associated with France's Total and China's CNPC for the $27 billion site, which has already conveyed its first cargo of liquefied natural gas (LNG) from the port of Sabetta. It is considered one of the most courageous projects, being expected to commence with a yearly production capacity of 5.5 million tons and boost it to 16.5 million tons by the beginning of 2019.

Yamal LNG shares are held by Novatek (50.1%), Total (20%), China's CNPC (20%) and the Silk Road Fund (9.9%). The site has had financial and technical hurdles over the years. The Yamal peninsula contains significant hydrocarbon reserves, being situated in a remote area in the Arctic circle where temperatures are around -50°C. Since its initiation in late 2013, an airport and a port have had to be built for the project, as well as gas collectors and the LNG plant itself.

Samuel Lussac, an oil and gas specialist at Wood Mackenzie, declared that LNG was shipped on time and on budget, which is unusual in the LNG industry, taking into consideration challenging operations conditions. 

According to him, Yamal LNG still deals with risks as transportation via the Northern Sea Route is less developed and its role of a major LNG delivery path is uncertain.

Russia wishes the route to be shorter and an easier way to desired Asian markets and has produced massive icebreakers recently. The route along the northern coast of Siberia permits ships to save the trip by 15 days to Asian ports in comparison with the main route via the Suez Canal.

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