LNG

A fire apparently caused by a drone attack broke out at a Baltic Sea fuel terminal in Russia owned by the largest Russian liquefied natural gas producer Novatek.

“There were no casualties as a result of the fire at the Novatek terminal in the port of Ust-Luga and the personnel were evacuated,” said a statement from the authorities in the Ust-Luga area near the Gulf of Finland and called the Leningrad region.

The Ust-Luga complex is located about 170 kilometres (105 miles) west of the city of St. Petersburg and processes stable gas condensate.

This is a very light oil obtained by separation from natural gas during production and during distillation the condensate at Uist-Luga produces fuels such as heavy naphtha, jet fuel, fuel oil and gasoil..

Novatek in addition to the Ust-Luga complex also owns the Yamal LNG export plant that still ships cargoes to Western Europe and China from the Yamal Peninsula in Arctic Russia.

Condensate

Novatek said in its most recent earnings statement on January 17, 2024, that the volume of condensate handled at the complex in Ust-Luga rose by 0.4 percent to 7 million tonnes.

Russian news agencies reported that two storage tanks and a pumping station had been damaged at Ust-Luga but that a fire had been brought under control with no one was reported injured.

Novatek said in a statement it had suspended some operations after the fire which it said was the result of “external influences”.

Novatek added that the production process at Novatek-Ust-Luga has been suspended and a damage assessment process had started.

Analysts note that Russia and Ukraine have been targeting each other’s energy infrastructure in drone strikes designed to disrupt supply lines and logistics since the conflict began in February 2022 after Russia invaded Ukraine.

The Ust-Luga port area was also well known for its connections to the former Gazprom-operated natural gas Nord Stream pipelines that are no longer in operation.

Nord Stream gas

The Nord Stream pipelines were ruptured in September 2022 in still unexplained sabotage attacks that halted all Russian pipeline gas exports to Germany and the European Union.

The Nord Stream II pipeline bypassed EU members Poland and Lithuania, as well as the traditional pipeline transit nation of Ukraine on its 1,200-kilometres route from Ust-Luga to Greifswald near the Baltic port of Lubmin in northeast Germany and carried 55 billion cubic metres of gas.

The other main Gazprom gas pipeline export route to Germany was the Nord Stream I pipeline which ran from Vyborg port in northwest Russia to the same German landfall near Lubmin, which is now the site of a German LNG import terminal.

An important logistical link in Russian liquefied natural gas trading, a huge floating storage unit called “Saam FSU”, was heading past the Norwegian coast on June 20 for its destination port of Murmansk.

Russian Prime Minister Mikhail Mishustin said the government was taking additional measure to increase liquefied natural gas cargo deliveries to the Asia-Pacific by the Northern Sea Route to offset the loss of pipeline gas customers in the European Union.

Sovcomflot said a keel-laying ceremony was held at the Zvezda Shipbuilding yard in Russia’s Far East for a new Arctic liquefied natural gas vessel ordered by the Russian tanker and LNG carrier fleet owner.

Novatek, the Russian natural gas company and operator of Yamal LNG and developer of the Arctic LNG II project, reported declines in annual revenues and profits because of the adverse effects of Covid-19 for much of 2020 and the impact of a weaker Russian rouble.

Russia is proceeding with the world’s largest LNG trans-shipment facilities at near the ports of Murmansk and Kamchatka and has received financing for the two floating storage barges being built in South Korea.

Daewoo Shipbuilding and Marine Engineering (DSME) signed the newbuild deal in 2019 with the project participants, Russian natural gas company Novatek and Japanese shipping company Mitsui OSK Lines.

The agreement with DSME is for two very large FSUs worth a total of $750 million and each of the vessels will have capacity of up to 360,000 cubic metres.

Russia's Gazprombank, the finance arm of the natural gas company Gazprom, confirmed it would lend $600M to fund most of the vessel construction costs for Novatek and MOL.

Gazprombank’s loan is denominated in euros and amounts to €522 over a term of 16 years.

The storage facilities will transport LNG from the Arctic-ice class gas carriers to conventional vessels and will be used along the Northern Sea Route, including for Novatek’s Arctic LNG II project which is under construction on the Gydan Peninsula.

Two floating facilities will be set up at Novatek’s gas hubs in the Murmansk region and in the Kamchatka peninsula in Russia’s Far East.

Korea's Daewoo shipyard expects the FSUs to be completed by the end of 2022, well ahead of the scheduled start-up of Arctic LNG II.

Murmansk will be used for cargoes heading for Western Europe and the Kamchatka base for Asia-bound cargoes.

The FSUs will also store LNG from the Yamal project in Arctic Russia and transfer loads to ice-breaking LNG ships or conventional LNG carriers.

The proposed trans-shipment projects and land stations are expected to be partly financed by the Japan Bank for International Cooperation.

The Norwegian logistical and ship management company, Tschudi Shipping, had previously handled the reloading operations off Norway for Russian Yamal LNG trans-shipments after it signed an agreement with Novatek in September 2018.

During 2018 and early 2019 Novatek and its partners used an area off the Norwegian port of Honningsvag as a trans-shipment point for several million tonnes of LNG transferred.
The last LNG tanker left Honningsvag at the start of July 2019.