LNG will grow in the Arctic
Russia’s plans to boost LNG production up to 2035 – a review by the Global Energy Association. Russia plans to triple at the very least production of liquefied natural gas over 15 years. But there are also plans to boost production fourfold or even ninefold.

Russia’s intention is to produce more LNG in the Arctic in new and in already established projects.

A planned breakthrough

    The Russian government approved a long-term programme for LNG production in March calling for an optimistic target of LNG production by 2035 of 140 million tonnes per year.  Annual capacity for LNG production now stands at about 28 million tonnes.

    Actual production last year exceeded 30 million tonnes as a result of increased levels on existing production lines. Over the next 15 years, according to the government’s strategy maximum, production capacity could reach 270 million tonnes.

     Total production at plants now under construction could total 21.3 million tonnes of LNG.  Production lines considered likely and possible could total 88 million tonnes and potential lines amount to 131-147 million tonnes.

    “Deposits on two peninsulas – Yama and Gyda —   will be, in the first instance, the potential production points for large-scale LNG operations, taking account of available resources and logistical access for gas-carrier vehicles,” said the Deputy Prime Minister responsible for the sector, Alexander Novak. “These are located at some considerable distance from gas pipeline systems as well as from the coastal region in the far east, including the island of Sakhalin, the Sea of Okhotsk and the Arctic Ocean, the north of Krasnodar region and shelf projects.”

    Projects in operation

    Russia has two major LNG plants – Sakhalin-2 (11.6 million tonnes of LNG in 2020) and Yamal LNG (17.5 million tonnes).

    A fourth production train is to be launched soon at Yamal LNG with a production capacity of 0.9 to 0.95 million tonnes, which can be expanded to 1.5-1.6 million per year.

    Yamal LNG is the only Arctic LNG plant in the world. Shareholders in the project, operating on the basis of the South Tambey gas field on Yamal, are Novatek, with a share of 50.1 %, Total (20 %) and the Silk Route Fund (9.9 %). For the moment, the largest share of gas produced at this plant – about 70 % — goes to Europe, but the amount destined for Asia is gradually increasing.

    Another company, Cryogas Vysotsk, has a capacity of about 0.7 million tonnes per year.

    Novatek’s strategy focuses on raising LNG production to 70 million tonnes by 2030 in Yamal and Gyda.

    Under construction

    The second LNG project in Yamal – Arctic LNG-2 (Novatek holds 60 %, CNOOC 10 %, CNPC 10%, Total – 10 %, Consortium of Mitsui and Jogmec 10 %). The project is composed of three trains on the basis of the Utrenneye field on the Gydai peninsula – each with a capacity of 6.6 million tonnes. The sum total of capacity is 19.8 million tonnes with the trains due to go into operation in 2023, 2024 and 2026.

     Gazprom is also building an LNG complex at Portovaya with a production capacity of 1.5 million tonnes of LNG per year on the Baltic coast. It is unclear for now when this plant is to start operations. Initially planned to go into operation in 2018, that date was set back to 2020, with the proposed opening now set for the end of 2021. The plant is located 60 km from Vyborg with plans for two LNG trains, storage in a reservoir and a floating storage area.


    Novatek may build another LNG plant – the Ob pant in Yamal. Plans had called for the plant to be built in two stages, each with a capacity of 2.5 million tonnes in 2023 and 2024, but a decision on investment was put off. The plant’s capacity could be expanded by a quarter, according to a company statement issued in February. Its resource base is the Verkhnetiuteyskoye and West Seyakhinskoye fields and plans call for the plant to be built with Russian technology.

    Over the next two years, the company is to decide on a fourth LNG project, Arctic LNG-1, with a capacity of 20 million tonnes a year.

    These projects appear to be feasible, but experts believe there are other, more realistic projects. These include the Yakutia project of YATEK (Yakutsk Fuel and Energy Company) – an affiliate of the A-Property company, with a capacity if 17.7 million tonnes (taking account of an expansion in the second stage from the initial plan of 8.9 million tonnes). The company has yet to secure official permission from authorities on LNG exports, granted so far to only Gazprom and Novatek. And it is so far unclear whether it can attract financing and government tax breaks.

    Construction has been under consideration for several years of an LNG plant in the Russian far east in De-Kastri in Khabarovsk region based on the Sakhalin-1 project. Capacity has been planned for 6.2 million tonnes and participants include ExxonMobil (30 %), Rosneft (20 %) ONGC Videsh (20 %) and SODECO (30 %).

    It is presumed that an investment decision on this project may be adopted in 2021, with construction to be completed by 2027. Discussions on the feasibility of the project have been going on for several years with gas now being pumped back into the strata. Also under consideration is construction of a new LNG plant or the sale of gas for a third stage of the Sakahlin-2 plant. Talks with Gazprom to establish a price have reached no deal.

    Another possible project under discussion is a complex to refine ethane-containing gas in Ust-Luga in Leningrad region with Gazprom and Rusgazdobycha with a capacity of 13.3 million tonnes. Two trains are possible at this plant, according to documentation as confirmed by Glavgosexpertiza, a Russian NGO charged with reviewing engineering projects.

    It is clearly premature to talk about carrying out the Arctic LNG-3 project, with a resource base in the north district of the Gyda peninsula. This project may get underway at the end of this decade or the beginning of the next.

    Nor is it realistic to consider the expansion of the Sakhalin-2 project with a capacity of 5.4 million tonnes. The partner companies periodically indicate that an expansion is being examined, but problems with securing a resource base remain. There is no agreement in place to buy gas from Sakhalin-1 and more work is required by the companies to develop a separate resource base.


    Several “potential” projects are also under consideration.

    These include an LNG plant at the Tambey field at the port of Sabetta in the Arctic — used to export Novatek gas – with a capacity of 20 million tonnes. According to plans, construction could start in 2030.

    But Gazprom has not yet announced plans for construction of an LNG plant at this field and it is premature to discuss the economics of the project.

    Another plant under discussion – with proposed completion in 2035 — is connected with the Shtokman field, with a capacity of 30 million tonnes. Research into possible investment has already been conducted. A time frame for proceeding with operations at Shtokman has been repeatedly postponed and the parameters of the project have been subject to change.

    Recent media reports indicate that production may start here in 2029, with Initial plans calling for an annual capacity of 7.5 million tonnes, though Gazprom two years ago took the decision to do away with the project’s presumed operator.

    Gazprom may build small-capacity LNG plants in Vladivostok or on the Black Sea, with capacities, respectively, of 1.5 million tonnes and 0.5 to 1.5 million tones. The resource base for the Vladivostok project would be the Kirinskoye or South Kirinskoye field. Resources for the Black Sea project would be transported by pipeline.

    The Black Sea project was already the object of discussions with the Austrian company OMV – with the project being put off three years ago.

    Another potential project is Pechora LNG – which, according to Kommersant newspaper, was sold by the heirs of businessman Dmitry Bosov to the former co-owner of the National Container Company and former Russian member of parliament Vitaly Yuzhilin and his partners. Plans called for a plant with a capacity of 4.3 million tonnes based on developing the Kumzhinskoye and Korovinskoye fields in the Nenets district of Arkhangelsk region.

    Prospects for this plant are for the moment unclear. But, according to Kommersant, its new owners intend to produce methanol for export and put into operation the plant’s first stage by 2025.

    Further potential Arctic projects include Rosneft’s Kara LNG with a capacity of 30 million tonnes and Taimyr LNG, with a projected capacity of 35-50 million tonnes.

    The Kara LNG plant – on the island of Novaya Zemlya – could conceivably start operations in 2030-2035 with, as a resource base, known reserves in the Kara Sea and in the Prinovozemelsky-1 (Novaya Zemlya-1) licensed block.

    The Taimyr LNG plant has a projected capacity of 35-50 million tonnes and could be sited in the Bukhta Sever (North Bay) area of Krasnoyarsk region with a starting date of 2030. The company could also start up Far East LNG with a capacity of 6.2 million tonnes and a potential expansion to 10 million tonnes.

   What price today, a pound of LNG?

   Developers believe the cost price of producing LNG in Russia will be lower than that of its competitors – ranging from $3.70-7.00 per million BTU. Russia’s traditional main competitors are Qatar, Australia and the United States. Russia believes that LNG will be in demand against a background of shortages starting in 2027.

    The government believes that carrying out this programme will help realise the resource potential of Yamal, Gyda and the north of Krasnoyarsk region as well as the Arctic shelf by attracting new investors.

     The rapid development of the energy transition must also be taken into account, particularly within the European Union. This transition is predicated on a more active use of non-hydrocarbon technologies in producing energy. And that means that, along with the development of LNG programmes, it is vital to work on developing alternative technologies for using gas, including as a base for producing hydrogen.


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April 2021