RUSSIAN LNG: COMPETITIVE ADVANTAGE

PE - A steadily growing fleet of liquefied natural gas (LNG) carriers purpose-designed to combat the ice floes of the Northern Sea route is giving the giant Yamal plant in the Arctic Circle a long-term competitive advantage, as the vessels deliver gas into Asia and Western Europe in conditions that were until recently considered too hostile.

As two notable events showed in late November 2018, the vessels have opened up the gas-hungry markets of the Asia Pacific region just as the Yamal plant's third train is being steadily commissioned and worked up to full capacity through 2019. They also underpin president Vladimir Putin's determination to deploy the nation's oil and gas reserves as part of Russia's global diplomacy, especially in a growing rapprochement with China.

First, the 299-metre long Arc7 ice-class LNG carrier, Novatek's Rudolf Samoyvich, delivered the first shipment from the plant to China National Offshore Oil Corporation after sailing through the Northern Sea without the necessity of being escorted by ice-breakers. It was a breakthrough in LNG deliveries—the first of its kind in an easterly direction in these waters. To boot, it was made towards the end of the navigation period.

Until the first Arc7 vessel, the Christophe de Margerie, took the inaugural load from the plant in 2017, the Northern Sea route skirting the Russian coast to the Bering Strait, which separates Russia from Alaska, was not considered viable. Temperatures at the Yamal peninsula can fall to minus 50C in winter.

Aside from the seagoing achievement, the delivery showed the Yamal plant can compete in the Asia Pacific. According to Novatek chief executive Leonid Mikhelson, the Rudolf Samoyvich took seven and a half days to sail from the port of Sabetta in Ob Bay on the Yamal Peninsula all the way into the Bering Strait after loading up in late October. It took another 13 days to berth at the Fujian LNG terminal in China. Throughout, the vessel sailed at commercially viable speeds.

A few days later another Arc7 carrier, the Vladimir Rusanov jointly owned by Tokyo-based MOL and China's Cosco Shipping, took the Yamal plant's operational competitiveness a step further when it completed the first ship-to-ship transfer of LNG from the Arctic. In a milestone that knocked about a week off the vessel's normal round trip, the Vladimir Rusanov off-loaded a cargo of about 170,000 cm of LNG to an Atlanticmax-class vessel, the Sovcomflot-owned Pskov, in sheltered waters at the small port of Honningsvag in Norway. In another first, neither vessel was moored to a jetty during the operation.

Hailing the operation as "a key step in the use of ice-breaking vessels for ship-to-ship operations in LNG transportation," MOL president and chief executive Junichiro Ikeda pointed out that the transfer to a lower-standard ice-class vessel like the Pskov meant the Vladimir Rusanov could sail straight back and pick up another load at Sabetta rather than having to continue on to a receiving terminal in Western Europe. The round trip would normally take two weeks.

The operation also allows the Arc7 vessels to be put to better use in conditions for which they were designed because access to the Yamal Peninsula by non-ice class ships during the winter months is limited. The Arc7 design was always considered so fundamental to the operational success of the Yamal plant that production was delayed until the first vessels could be delivered.

More Arc7 vessels will be launched during 2019—MOL alone expects to put two new ships into service, all destined for action in the Arctic Circle just as the third train at the Yamal plant heads towards full production. In one of the critical actions, in September a compressor gas turbine was successfully fired, the company reported.

Other companies besides MOL are positioning themselves to capitalise on the new route. Sovcomflot, for instance, has built up its fleet of gas carriers to 13 and has chartered them to Gazprom, Sakhalin Energy, Shell, Sibur and Tangguh LNG as well as to Yamal. In addition to the Pskov that completed the round trip to Western Europe, Sovcomflot's Melampus is another Atlanticmax vessel capable of performing similar duties.

In the longer term the Arc7 class's capacity to deal with the Northern Sea will prove vital to the extraction of the Arctic Circle's natural gas reserves accounting, according to some estimates, for about 30pc of the world's undiscovered fields.

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Earlier: 

2019, January, 4, 11:45:00 WORLD LNG INVESTMENT UP REUTERS - A final investment decision (FID) could be taken on more than 60 million tonnes per annum of LNG capacity this year, well above the previous record of about 45 million tonnes in 2005 and triple last year’s 21 million tonnes, Wood Mackenzie’s research director for global gas and LNG, Giles Farrer, said.

2018, December, 24, 11:50:00 CHINA'S LNG IMPORTS UP BY 48.5% REUTERS - China's LNG imports totaled 5.99 million tonnes in November, up 48.5 percent from the same month last year, data from the General Administration of Customs showed.

2018, December, 21, 14:00:00 NOVATEK, SACE STRATEGIC COOPERATION NOVATEK - PAO NOVATEK ("NOVATEK" and/or the "Company") and SACE (CDP Group) signed a Memorandum on Strategic Cooperation (“Memorandum”) in relation to the Company's current and future LNG projects. The parties agreed to develop long-term cooperation on the Arctic LNG 2 project and potential new LNG projects involving Italian suppliers and engineering companies. Русский | English

2018, December, 21, 13:55:00 SAIPEM, RENAISSANCE IN RUSSIAN LNG SAIPEM - Saipem, in Joint Venture with Renaissance, a Turkish oil&gas services company, has been awarded a new Onshore E&C project in the Russian Federation worth 2.2 billion Euro overall. As leader of the JV, with a shareholding of 50%, Saipem’s portion of the total amount is therefore approximately 1.1 billion Euro.

2018, November, 30, 11:55:00 RUSSIAN LNG IS BETTER REUTERS - The United States has been pressing Europe to cut its reliance on cheap Russian gas and buy much more expensive U.S. LNG instead, which many European countries, including industrial heavyweight Germany, have so far resisted.

2018, November, 28, 12:50:00 RUSSIAN LNG TO EUROPE REUTERS - “Between 150 and 160 transfers will take place in the port’s fjord from November to June,” local mayor Kristina Sigursdottir Hansen told Reuters. “Ships will be coming with gas from Russia, from Yamal ... More than 300 ships actually (will be involved).”

2018, November, 23, 12:10:00 START OF YAMAL LNG - 3 NOVATEK - PAO NOVATEK (“NOVATEK” and/or the “Company) announced that its joint venture Yamal LNG has commenced initial production of LNG at the plant’s third LNG train. The total nameplate capacity of all three LNG trains is 16.5 mmtpa, or 5.5 mmtpa per LNG train. Русский | English