Private Firm Plans 18mn mt/yr Russian LNG Project
Pre-front end engineering and design work is nearing completion on a proposed LNG project in Russia's Far Eastern region of Yakutia, its developer Yakutsk Fuel and Energy Co (Yatec) reported on March 17.
Yakutsk LNG has been touted as the means of commercialising the vast but under-utilised gas resources of the Russian Far East. Limited local demand and a lack of gas infrastructure has stifled development. The region's only export route for gas is the Power of Siberia, which is fed by giant fields and exclusively used by state-owned Gazprom.
Yatec, which was bought by Russian investment group A-Property in 2019, is a small-sized operator by Russian standards, currently producing only around 1.7bn m3/yr of gas. But it has big ambitions.
The operator aims to scale up production to 15bn m3/yr in the first stage of an expansion and 28bn m3/yr in the second, Yatec's deputy general director for gas production and processing, Sergey Kuznetsov, said at the LNG Congress Russia in Moscow. The company plans to ramp up its exploration programme, in order to expand its reserve base from 390bn m3 currently to over 1 trillion m3. It recently acquired three more gas licences to support this effort.
"We have tremendous amounts of hydrocarbons and great potential for further prospecting," Kuznetsov said.
The extra supply will underpin a liquefaction project on the Far East coast. The facility will initially consist of two trains with a combined output 8.7mn metric tons/yr. At a later stage two larger trains will be added, raising production to 17.7mn mt/yr. This represents a revision from a earlier plan for a 13mn mt/yr terminal.
The catch is that Yatec's gas fields are in the west of the Yakutia region, far from the coast. The project will therefore require the construction of a 1,300-km pipeline between Kysyl-Syr to the Ayan harbour. Yatec also wants to export condensate via a parallel pipeline, with output rising to 0.8mn mt/yr in the first stage and 1.5mn mt/yr in the second.
Kuznetsov declined to provide a specific timeline for the project's implementation. But he said pipeline construction would take three years and that other aspects of the project would be developed in tandem. Asked when the company aimed to take a final investment decision, Kuznetsov was vague. Russia's 2035 LNG strategy calls for an increase in production capacity to 140mn mt/yr but he said: "If we want to achieve those results, investment decisions need to be made this year or next year, otherwise we won't be able to achieve that before 2035. Perhaps I am being a bit optimistic."
Yatec is a leader in Russia in terms of production costs, with moderate debt and sustainable cash flow, he said.
Russian prime minister Mikhail Mishustin earlier this month called for the development of small-scale LNG supply in the Russian Far East, to increase access to gas supply and support economic growth. The region's gasification level is three times lower than the national average.
Apart from Novatek's state-backed LNG projects in the far north, not a lot is happening in the newbuild LNG sector. Russia's biggest gas company Gazprom said it had cancelled a contract for an LNG terminal in the Baltic region citing the need to cut costs March 16, while its other LNG projects in Vladivostok and the expansion of Sakhalin Energy have also been scrapped or put on hold for various reasons.