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.

Uniper, the German utility that was saved from bankruptcy by Germany’s Federal Government after the halting of Russian pipeline gas supplies, has imported its first US LNG cargo to the floating import facility at the North Sea port of Wilhelmshaven.

A leak of natural gas from the blocked Russian Nord Stream II link to Germany that was never brought on line but was fully primed to start up has led Denmark to advise Baltic Sea shipping not to come within 5 kilometres of the pipeline.

UK major Shell plc said it intended to withdraw from involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas in a phased manner, aligned with new government guidance.

The now London-based company said that as an immediate first step, it would stop all spot purchases of Russian crude oil and would close its filling stations as well as jet fuel and lubricants operations in Russia.

The latest Shell statement follows last week’s moves to end involvement in the Nord Stream II natural gas pipeline project and to exit its equity partnerships with Russian gas giant Gazprom and related entities.

These included ending its 27.5 percent stake shareholdings in the Sakhalin-II LNG export facility in the Russian Far East, its 50 percent stake in the Salym Petroleum Development and the Gydan energy venture.

“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel - despite being made with security of supplies at the forefront of our thinking - was not the right one and we are sorry,” declared Shell Chief Executive Ben van Beurden.

“As we have already said, we will commit profits from the limited, remaining amounts of Russian oil we will process to a dedicated fund,” he added.

“We will work with aid partners and humanitarian agencies over the coming days and weeks to determine where the monies from this fund are best placed to alleviate the terrible consequences that this war is having on the people of Ukraine,” stated Van Beurden.

Discussions

Shell also explained that its actions to date had been guided by “continuous discussions with governments” about the need to disentangle society from Russian energy flows, while maintaining energy supplies.

The company said that threats to stop pipeline flows to Europe further illustrated the “difficult choices and potential consequences” that are being faced.

Shell plans to immediately stop buying Russian crude oil on the spot market and we will not renew term contracts.

“At the same time, in close consultation with governments, we are changing our crude oil supply chain to remove Russian volumes,” said the company.

“We will do this as fast as possible, but the physical location and availability of alternatives mean this could take weeks to complete and will lead to reduced throughput at some of our refineries,” it added.

Shell is now implementing a “phased withdrawal” from Russian petroleum products, pipeline gas and LNG.

“This is a complex challenge. Changing this part of the energy system will require concerted action by governments, energy suppliers and customers, and a transition to other energy supplies will take much longer,” it stated.

Van Beurden also declared that ultimately, it was for governments to decide on the “incredibly difficult trade-offs” that must be made during the war in Ukraine.

“We will continue to work with them to help manage the potential impacts on the security of energy supplies, particularly in Europe,” the CEO concluded.

Shell, the UK-based major and leading liquefied natural gas trader, said it intended to exit joint ventures in Russia including its almost one-third stake in the Sakhalin-II LNG export project in the Russian Far East and the suspended Nord Steam II pipeline project connecting Russia with German via the Baltic Sea.

Germany, the world’s fourth-largest consumer of coal and which is celebrating the near completion of the controversial Nord Stream II gas pipeline from Russia, is set for a week of protests by environmental and left-wing activists - at the site of what will be the country’s first LNG import terminal.

Police said that the protesters were setting up a camp and plan blockades and other activities on approach roads to the LNG terminal location at Brunsbüttel from July 29 to August 2.

“It is assumed that most of the participants in the ‘climate camp’ will express their protest peacefully,” a spokesman for the Schleswig-Holstein state police told the Germany news agency DPA.

The state police said that several hundred officers would be on duty at the LNG terminal site from July 28 through August 2.

The developers of the Brunsbüttel terminal have received all of their regulatory permits.

However, since the terminal’s engineering phase gathered pace, the state Greens party has called for the project to be halted, claiming that it would a centre for the import of US LNG made from feed-gas that was a product of hydraulic fracturing.

German natural gas supplies mostly come from Russia's Gazprom and the Nord Steam I and new Nord Stream II projects and from offshore fields in Norwegian waters.

Elbe River

Brunsbüttel, on the Elbe River near Hamburg, is the most advanced of just two terminals moving forward.

The second terminal is west of Hamburg and also on the Elbe at the town of Stade.

The Brunsbüttel terminal is scheduled to be commissioned around July 2024 and the Stade facility a year later.

The Brunsbüttel joint venture is owned by two Dutch companies, Gasunie LNG Holding BV and Royal Dutch Vopak, as well as Oiltanking GmbH, a subsidiary of Marquard & Bahls AG, based in Hamburg.

The aim of the joint venture is to build and operate a multifunctional import and distribution terminal for LNG.

The terminal will also provide a wide range of services including the loading and unloading of LNG carriers, the temporary storage of LNG, regasification, feeding natural gas into the German natural gas network, and distribution of LNG via tank trucks and LNG railcars.

The developers opted for the location at Brunsbüttel because of its proximity to Hamburg and the many manufacturing companies based in the region.