LNG

Fluxys Belgium, the operator of the national gas grid and the LNG terminal at Zeebrugge, reported increases in annual revenues and net profits as LNG shipping and truck-loading activities rose to record levels even amid the challenges of the Covid-19 pandemic.

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 Russian natural gas company and operator of the Yamal plant and leader of the Arctic LNG II project, said a supplementary Train will come on stream at Yamal before year-end as the second project continues to advance.

Novatek said in a presentation distributed to investors that the Yamal facility had sent out almost 440 cargoes amounting to 32 million tonnes through April 2020.

A total of 29 nations had received Yamal LNG since the plant came on stream at the end of 2017.

The small-scale fourth Train at Yamal will produce 900,000 tonnes of LNG compared with the three larger Trains, which each have capacity of 5.5 million tonnes per annum.

When the supplementary Trains starts up in several month overall output at Yamal will be 17.4 MTPA.

As regards the Arctic LNG II project being developed with three gravity-based platforms on the Gydan Peninsula, 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.

Latest 2P reserve estimates for Utrenneye gas give resources of 1,180 billion cubic metres and with 62 million tonnes of condensate.

“More than 5,000 people at currently working at the field,” said the company.

‘They have completed the backfilling of the Gas Treatments Unit-1 for the first dome and well pads 1, 2, and 3 for production drilling,” it added.

“Official permits have been received to proceed with completing Dry Dock No. 1 and there is continued rock blasting at Dry Dock No. 2,” stated Novatek.

The Russian company 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).

Novatek also gave a brief overview of its third LNG facility, the small-scale Cryogas-Vysotsk plant on the Baltic Sea coast.

Novatek owns 51 percent of Cryogas-Vysotsk, which it acquired in 2017. The facility supplies mainly Russian customers, but also small-scale users in Scandinavian and northwest European markets.

The first quarter 2020 volumes sold by Cryogas-Vysotsk amounted to 112,000 tonnes of LNG, including 26 ship-loadings and 195 loadings by trucks .

The Cryogas-Vysotsk project capacity is 660,000 tonnes per annum of LNG.

Infrastructure includes a 42,000 cubic metres capacity storage tank and an offloading terminal designed to handle small-scale and medium-scale carriers with a capacity of up to 30,000 cubic metres.