Novatek, Russia’s largest independent gas producer, has suspended operations at two major liquefied natural gas (LNG) projects amid international sanctions that have hampered their viability, Upstream Online reported on September 23, citing local media.
Specifically, business newspaper Kommersant on September 23 quoted a source close to Novatek as saying that work had stopped at the Murmansk LNG project and the Obsky LNG project.
Novatek is now looking for alternatives to LNG exports to monetize its gas reserves on the Yamal Peninsula in Western Siberia, located near its first major project, Yamal LNG, Russian media reported.
Energy sanctions were first imposed on Russia by the US and EU after Moscow launched a military operation in Ukraine in 2022, and have been tightened since then, including targeting Russian LNG exports. The sanctions regime has derailed plans to export LNG from Novatek’s Arctic LNG 2 project in the Arctic.
Novatek is Russia's largest independent gas producer. Photo: Oreanda News
First proposed in May last year, the Murmansk LNG project – located in the Arctic, on the shores of the Kola Bay near Murmansk and the village of Belokamenka – is seen as crucial to Russia’s efforts to expand its LNG export capacity after Moscow lost market share in pipeline gas exports to Europe following the outbreak of the conflict.
The facility plans to use gas supplies from Russia’s main domestic pipeline network to produce LNG at a capacity of 20.4 million tonnes per year. Earlier this year, the project’s capacity was cut to 13.6 million tonnes per year.
The project is considered technically feasible despite international sanctions, with electric drives used instead of Western-made gas turbines – which are also subject to sanctions – to drive the compression and liquefaction pipelines, with electricity sourced from a local nuclear power plant.
Additionally, because it is located in a part of the Barents Sea that is ice-free for most of the winter, Murmansk LNG will avoid the need for ice-breaking LNG carriers. Efforts to export LNG from Novatek’s Arctic LNG 2 project in the Arctic have been hampered by sanctions, which have limited Russia’s access to ice-breaking LNG carriers, among other factors.
Since early August, Arctic LNG 2 has loaded five cargoes at the Gydan Peninsula in Western Siberia. However, none of these have been discharged at foreign ports, with at least three ending up at large floating storage facilities.
Meanwhile, for the Obsky LNG project, Novatek plans to exploit the gas reserves of up to four fields on the Yamal Peninsula to support the production of 6 million tons of LNG per year, with the super-chilled gas being exported via the Sabetta port, which currently serves the Yamal LNG project.
Yamal LNG, in which Novatek holds a 50.1% stake, continues to ship gas to customers in Europe and Asia because development began before the Russia-Ukraine conflict broke out and the project has not been hit by sanctions.
Novatek is currently studying alternative options to continue developing untapped gas fields on the Yamal Peninsula, considering using gas to produce ammonia and common fertilizers such as urea, Kommersant newspaper reported.
Western countries do not sanction Russian fertilizer exports due to global food security considerations – this is the basis for Novatek's plan to convert the Obsky LNG project.
Last year, Russia's fertilizer exports rose 14% to 32 million tonnes, with Brazil, India and the United States the top three buyers, Russian state news agency RIA-Novosti said.
Analysts have linked the recovery in Russian natural gas production this year to demand for gas to produce fertilizers, according to Upstream Online.
Novatek could export fertilizers to international markets via the port of Sabetta, according to Kommersant.
Despite the current suspension, Novatek has not scaled back its efforts to find additional gas reserves in the Gydan Peninsula, according to information disclosed about tenders posted by the company's subsidiaries on a Russian tender database.
Novatek, which is leading Russia's push to become a major LNG supplier to world markets, has licenses for dozens of blocks at Gydan, which will supply gas to the company's future LNG plants.
Novatek has been contacted for comment.
Minh Duc (According to Upstream Online , Gas Processing )
Source: https://www.nguoiduatin.vn/lam-vao-the-bi-ga-khong-lo-nang-luong-nga-novatek-dinh-chi-2-du-an-lng-lon-204240924103010827.htm
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