Yamal LNG Network Coming on Stream

June 26, 2017

While the Yamal project has dominated Russia’s LNG exports story in 2017, the nation’s gas infrastructure is rapidly developing, embedding the energy source in future distribution at home and overseas.

Direct state actions will see 14 LNG-powered vessels in service by 2022 (including tugboats, bunkering ships, a new icebreaker and a ferry), but more subtle promptings from the Ministry of Transport will have a deeper impact. The Ministry has set aside Rubles 1.3 billion ($22.9 million) of federal money for the period 2018-22, to fund tax relief for LNG shipping investments, ease customs duties and accelerate depreciation where LNG equipment is concerned, and subsidise ship conversion work.

Photo: Total

Yamal LNG: Total's Natural Gas Asset in Russia

Tax breaks are also available where land is used for LNG-related activities, while the Ministry of Transport has also said that it will favour shipowners investing in LNG-powered ships when deciding on state carriage contracts.

The Government predicts that LNG marine fuel sales will reach 120,100 tonnes a year by 2022, and Gazprom is developing three coastal zones as centres for LNG bunkering – one each on the Baltic, Black Sea and in the Russian Far East. Meanwhile, The Ministry of Transport has designated the Republic of Tatarstan in the Volga District for a pilot a river LNG infrastructure scheme.

In June 2017, Gazprom and Shell signed Heads of Agreement to set up a joint venture aiming to secure financing for and carry out the design, construction and operation of a new LNG plant near the seaport of Ust-Luga with a 10 million tonne capacity LNG storage plant and an option for expansion to 15 million tonnes.

Plans are also progressing at Kaliningrad, where In November 2017 Hyundai Heavy Industries will complete a floating regasification unit ordered by Gazprom. Currently, the Kaliningrad Region receives natural gas via the Minsk – Kaliningrad pipeline, but the new Gazprom LNG import, storage and regasification terminal will receive up to 2.7 billion cubic meters of gas per year.

Gazprom has also ordered a pre-investment feasibility study that will select bunkering ports as part of its plans to construct an LNG plant on the Black Sea. In early June, the Russian giant signed a framework agreement with Austria’s OMV to develop a small-scale coastal LNG production terminal in the region, in plans that include transportation, marketing and sales. In 2016, Gazprom exported 6.1 billion m3 of gas to Austria, 38 percent up on the volumes exported in 2015.