LNG

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.

Russian natural gas company Novatek, the nation’s largest liquefied natural gas developer in the Arctic region, has also been building up the customer base of its small-scale Cryogas-Vysotsk plant on the Baltic Coast while making progress on assembling a shipping fleet for the Arctic LNG II project under construction on the Gydan Peninsula of northern Siberia.

Zvezda Shipbuilding in the Russian Far East has held a steel-cutting ceremony for the first in a series of 15 ice-breaking LNG carriers ordered by the nation’s Sovcomflot shipping line to serve the Arctic LNG II export project being developed by natural gas company Novatek.

The Zvezda complex is located at Bolshoi Kamen on the coast of the Sea of Japan and about 12 miles northeast of the city of Vladivostok.

The shipbuilder is owned by a consortium of Russian energy companies, including Rosneftegaz, Rosneft and the financial affiliate of Gazprom, Gazprombank.

Shipbuilding, financing, lease, and time-charter contracts were signed last year by the four companies involved in ordering the 15 vessels, the first of which is scheduled for delivery in the first quarter of 2023.

Participants in the ceremony on November 20 included Yury Borisov, Deputy Prime Minister of the Russian Federation, Leonid Mikhelson, Chairman of Novatek, Igor Tonkovidov, President and Chief Executive of Sovcomflot and Sergey Tseluyko, Managing Director of Zvezda Shipbuilding and Daniil Algulyan, Deputy Chairman of VEB.RF, the Russian bank providing the financing.

“The steel-cutting for the lead vessel heralds the building of a new generation of ice-breaking LNG carriers,” said Sovcomflot (SCF).

“The design of these new vessels incorporates the many years of experience Sovcomflot has acquired in operating large vessels within challenging ice conditions,” it added.

“The engineering solutions selected for this class of vessel will enable increased speed and manoeuvrability when sailing in ice conditions, compared with ice-breaking LNG carriers of the previous generation,” explained the shipping line.

“This will, for the first time, allow year-round navigation in the eastern sector of the Russian Arctic, thereby expediting the implementation of national plans to boost cargo traffic along the Northern Sea Route,” it added.

All the vessels in the series will be assigned an Arc7 ice class.

The first LNG carrier of the series was ordered directly by SCF, while the other 14 vessels were ordered by Smart LNG, a joint venture of Sovcomflot and Novatek.

The shipbuilding process is being supervised by the Russian Maritime Register of Shipping.

During the ceremony, Deputy Federation Minister Borisov said that the start of work was preceded by a “tremendous effort” both in terms of organisation and production preparations.

“These vessels will significantly contribute to the development of cargo traffic along the Northern Sea Route, which is strategically important for Russia,” explained Borisov.

Each vessel will have capacity of more than 172,000 cubic metres and be 300 metres long and over 48 metres wide. Their power capacity is 45 megawatts, with each vessel equipped with three unique azimuth propulsion units.

“The start of construction of the first in this new generation of LNG carriers by Zevzda is a significant milestone for the Russian shipbuilding industry, which has never before constructed vessels with this level of engineering complexity,” said SCF CEO Tonkovidov.

“We are looking forward to continuing our close collaboration with our partners and are ready to further support the Russian civilian shipbuilding industry as part of the implementation of major energy projects,” stated the CEO.

All the 15 new LNG carriers will be registered under the Russian flag and will be operated by Russian crews.

The Arctic LNG II project is being developed with three gravity-based platforms and the estimated capital expenditure for the joint venture is now put at the equivalent of US$21.3 billion.

Arctic LNG will produce almost 20 million tonnes per annum of LNG as well as gas concentrate from the principal feed-gas resources, the Utrenneye gas field.

Novatek holds 60 percent of the Arctic LNG project and four other 10 percent stakes are shared between various shareholders.

The 10 percent holdings belong to French major Total, which is also a shareholder in the Novatek company, China National Petroleum Corp., China National Offshore Corp. and a Japanese investor group comprising Mitsui & Co. and the government institution, the Japan Oil, Gas and Metals National Corporation (Jogmec).

Mitsui OSK Lines, the Japanese shipping company, said it signed charter agreements for three ice-breaking liquefied natural gas carrier for the Arctic II LNG project in the Gydan Peninsula of northern Siberia being developed by Russian natural gas company Novatek.

The three vessels are being built by the South Korean shipbuilders, Daewoo Shipbuilding and Marine Engineering, and are scheduled for delivery in 2023.

“The vessels will mainly transport LNG from a loading terminal on the Gydan Peninsula in the Russian Arctic to the floating LNG storage units (FSU) to be installed at the trans-shipment terminal in Kamchatka (eastbound) and Murmansk (westbound) via the Northern Sea route,” explained MOL.

The Arctic LNG II project being developed by Novatek with three gravity-based platforms and the estimated capital expenditure for the joint venture is now put at the equivalent of US$21.3 billion.

Arctic LNG will produce 19.8 MTPA of LNG as well as gas concentrate from the principal feed-gas resources, the Utrenneye gas field.

Novatek holds 60 percent of the Arctic LNG project and four other 10 percent stakes are shared between various shareholders.

The 10 percent holdings belong to French major Total, which is also a shareholder in the Novatek company, China National Petroleum Corp., China National Offshore Corp. and a Japanese investor group comprising Mitsui & Co. and the government institution, the Japan Oil, Gas and Metals National Corp. (Jogmec).

“Compared with MOL's previous icebreaking LNG carriers, which can only sail eastbound in the Northern Sea Route during mostly summer and autumn period of time when the ice is thin, the new vessels will have a narrower width, hull form optimized for ice breaking, and an increased propulsion engine output which will enable the vessels to sail east via the Northern Sea Route all year round,” stated MOL.

MOL added that combination of these three ice-breaking LNG vessels, which can transport LNG to the FSUs in the east and west throughout the year, and conventional LNG carriers that will transport LNG from the FSUs to their final destinations, will enable efficient year-round transportation.

“The eastbound transportation route will reduce the distance of the voyage by approximately 65 percent compared to the westbound route via the Suez Canal for Asian destinations, thereby making a significant contribution to a reduction of greenhouse-gas emissions by vessels,” said the Japanese company.

MOL noted that it had already been engaged in transporting LNG using three icebreaking LNG carriers on the Northern Sea Route since March 2018 for the Yamal LNG Project in Russia.

“These new contracts were concluded in recognition of MOL's proven track record and technical expertise in the Northern trade, and the experience and resources which the company has built over many years of LNG transportation,” said the company.

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.

Novatek, the natural gas company and operator of the Yamal LNG export plant in Arctic Russia, said the Arc7 ice-class LNG tanker “Christophe de Margerie” of Sovcomflot successfully transited the eastbound and ice-covered part of the Northern Sea Route and reached the Bering Strait in only 12 days.

Oct 2 (LNGJ) - Novatek said that 15 LNG cargos from the Yamal plant in northern Siberia were shipped eastwards to the Asia-Pacific market directly from Sabetta port via the Northern Sea Route during the third quarter 2019. “The eastward shipments represented about 25 percent of all LNG sent out from the Yamal plant during the quarter,” added Novatek.

A current fleet of 13 Arc7 ice-class tankers along with lower ice-class designated carriers transports cargoes from the Yamal facility to customers. Novatek said that another two Arc7 ice-class carriers are expected to be in operation by the end of 2019. “The increase of LNG delivered eastbound via the NSR confirms the commercial priority of the Asia-Pacific region as a strategic direction for future deliveries of Novatek LNG,” noted Lev Feodosyev, deputy chairman of the Novatek board.

French energy major Total has signed agreements with Russian natural gas company Novatek, operator of the Yamal LNG export plant, for the acquisition of a direct 10 percent stake in the Arctic LNG II joint venture proposed by Novatek for Russia’s Gydan Peninsula.