Gazprom Agrees Major NW Russia Gas Project
Russian Gazprom and state RusGazDobycha have decided the shape of their joint large-scale complex that will process ethane-containing gas and produce LNG at Ust-Luga (see banner picture, courtesy Ust-Luga Co) in the northwest of Russia, they said April 1.
The rubles 700+bn ($11+bn) plant will process 45bn m3/yr and produce 13mn metric tons/yr of LNG and up to 4mn mt/yr of ethane and over 2.2mn mt/yr of liquefied petroleum gases (LPG) and earn estimated revenues of $4bn/yr. The complex will be processing ethane-containing gas produced by Gazprom from the Achimov and Valanginian deposits of the Nadym-Pur-Taz region. After processing there will also be some 20bn m3/yr for injection into the national gas transmission system.
The first train is expected to come into operation in the second half of 2023 and the second train in late 2024. The project operator is RusKhimAlyans (Russian chemicals alliance), a 50-50 venture established by Gazprom and RusGazDobycha.
The operator's priorities include the development of basic and detailed design documentation and the launch of land planning activities at the leased site of the future complex in the southern part of the Ust-Luga port (1,400 hectares). It is also planned to devise contracting arrangements within the project, designate engineering, procurement and construction contractors, and place orders for long lead items.
The statement made no reference to foreign partners such as the Anglo-Dutch major Shell and Japanese Itochu, with whom Gazprom has been separately discussing a 10mn mt/yr LNG export plant near Ust-Luga.
This large-scale project is of great significance for Russia's social and economic development. During its most active phase, the construction will involve over 25,000 specialists, with more than 5,000 permanent jobs to be created to man the operation of the facility.
The plant will make it possible to increase Russian LNG exports and to take LPG exports up by 30%–40%. The production of ethane, which is in high demand in the domestic industry, will also grow substantially.
The ethane produced at the plant is to be supplied to a high-potential gas chemical facility whose construction is to be independently sponsored by RusGazDobycha (through a special-purpose entity, Baltic Chemical Complex). The estimated capacity of the future gas chemical facility is over 3mn mt/yr of polymers.
“Today, we have launched the implementation of an ambitious project that is simply unparalleled in Russia. Within a short time, we are going to build the most powerful gas treatment and liquefaction plant in the country. Together with the technically affiliated gas chemical facility, it will grow into a large modern industrial cluster in the northwest of Russia.
"The decision made today is a practical manifestation of the new economic model for the comprehensive monetization of hydrocarbon resources. Combining the production of LNG and ethane within one industrial site will have a beneficial effect on the economics and specific indicators of the project and will allow us to considerably mitigate our resource and price risks,” said Gazprom CEO Alexei Miller.
In May 2017, Gazprom and RusGazDobycha signed a Memorandum of Intent to implement projects aimed at advancing petrochemical production on the basis of the Achimov and Valanginian deposits within the Nadym-Pur-Taz region, as well as extracting and processing gas and condensate from the fields within the Tambei cluster that are owned by Gazprom.
Russia already has bigger LNG projects than the one outlined above: the privately-owned Yamal LNG for example has three trains of 5.5mn mt/yr each already in operation and is planning to build more plants that are larger.