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Russia carries on regardless

Energy majors Rosneft and Novatek are pushing ahead with LNG projects, despite the growing threat of US sanctions

Rosneft is advancing plans to develop its $15bn Far East liquefied natural gas project with ExxonMobil even after new sanctions forced the US company in late February to exit other joint ventures with its Russian partner. Novatek expects to launch the second stage of its $27bn Arctic Yamal LNG plant in September and start commissioning the third production line by the end of year. Meanwhile, energy giant Gazprom is pressing ahead with plans for LNG as a fuel, expanding its distribution networks at home and overseas.

Both Rosneft and Novatek are restricted in accessing US markets for long-term financing, with little clarity on whether the current tensions between the Kremlin and the White House may result in new prohibitions. To minimise the risk of further US sanctions, Novatek chief executive Leonid Mikhelson said the company will increase the use of Russian equipment and technologies in its next slate of projects.

Some 111 wells have already been drilled in the giant South-Tambey field, which is more than is required to cover the resource needs of the first and second production trains for LNG-1. The Yamal project has a planned annual total capacity of 16.5m tonnes, but Mikhelson suggests that productivity will easily exceed that level.

Novatek intends to become the world's largest LNG exporter in a decade and plans are well afoot for Arctic LNG-2 with Saudi Aramco poised to join Novatek, Total and China National Petroleum Corporation in the venture.

By building gravity-based structures locally for the production facility, Novatek hopes to cut plant construction costs by 30%, compared to LNG-1. The first of three trains for the 19.8m-tonnes-a-year LNG export plant on the Gydan peninsula is planned to be operational by 2022.

Russia's entire LNG potential was previously condensed in the Far East island of Sakhalin, where an annual production of 9.6m t/y allowed the country to secure 4.5% of the global market. Gas export monopoly Gazprom has a chequered record when it comes to LNG. Its flagship Shtokman LNG project ran aground and has been postponed indefinitely after its main market in North America experienced an upsurge in shale output. Another project, Vladivostok LNG, intended to supply the Asia-Pacific region, has also been put on the back burner after management prioritised the development of the Power of Siberia gas pipeline project to China.

However, a recent initiative, Baltic LNG, might be just the thing Gazprom needs to kick-start its LNG portfolio on the western front. It plans to build a gas-processing plant on the Baltic Sea to supply feed gas for the Baltic LNG plant and the Nord Stream 2 pipeline.

Gazprom is also developing LNG for domestic rail transport and has started to supply LNG to Russian Railways' locomotives in the Sverdlovsk region. Outside Russia, Gazprom is developing LNG as transport fuel projects in Vietnam, China, Belarus and Bolivia.

Gazprom Neft, the oil arm of gas monopoly Gazprom, plans to build the country's first LNG bunker barge by 2020.

On parade: Russia's LNG projects

Yamal LNG-1

Novatek-led project has three trains, total capacity of 16.5m t/y. Second train to be launched in September, third to be commissioned by end-2018.

Arctic LNG-2

Construction expected to begin in 2019, with the first of three trains operational by 2023. Output: 16.5m t/y, eventually rising to 19.8m t/y.

Sakhalin II

Russia's first LNG plant, with capacity of 9.6m t/y, came on stream in 2009.

Vladivostok LNG

This Gazprom LNG project has been shelved, with talk of a bunkering facility instead.

Baltic LNG

Gazprom plans to construct an LNG plant, 10m-t/y capacity, in the Leningrad region.

LNG regasification terminal, Kaliningrad region

Gazprom plans to construct a terminal with capacity of at least 9m cubic metres a day.


The Far East project has proposed production capacity of 6m t/y of LNG. Final investment decision planned for 2019.

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