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New Russian LNG Project to Start Feed Stage

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A $25 billion LNG project in Russia’s Far East will enter front-end engineering and design (Feed) in mid-2021, a representative of the developer said Monday. The project emerged into view quite suddenly last May (LNGI May6'20). The 18 million ton per year project, dubbed Yakutia LNG, is being developed by Globaltek, a subsidiary of investment group A-Property. That company is owned by businessman Albert Avdolyan. Avdolyan has business ties with Sergei Chemezov, CEO of state technology firm Rostec. Chemezov is a close ally of Russian leader Vladimir Putin. Yakutia LNG is to be located near the village of Ayan, on the western coast of the Sea of Okhotsk, in the Ayano-Maysky District of the Khabarovsk region (see map). The new project was pushed forward despite last year’s Covid-19 market uncertainty, which caused delays in many other LNG projects. It was also pushed forward despite several other LNG initiatives in the region (LNGI Mar.16'20; LNGI Jun.26'20). Yakutia is now in Russia’s draft LNG development plan. The country's ambition is to expand LNG exports from 30.5 million tons in 2020, to 140 million tons/yr by 2035, and potentially up to 280 million tons/yr in the more distant future. It is not clear when Yakutia LNG will see a final investment decision (FID). Construction should take five to seven years after FID, according to Globaltek, meaning that the plant may start operations in the late 2020s, rather than in 2025 as it was reported last year. The project has yet to secure an LNG export license. When the project popped into view, it was reported that TechnipFMC would design the facility, at that time planned as a $10 billion plant with a 13 million ton/yr capacity. TechnipFMC is now completing pre-Feed work, after which the Feed stage will start in mid-2021, Globaltek’s investment director Yelena Korenkova was quoted as saying at an event devoted to Russian-Indian cooperation in petrochemicals. Globaltek is now looking for strategic partners, Korenkova said. It is starting negotiations with investors from China, Japan, Indonesia and Europe, and is considering cooperation with Indian companies as well, she said. Yakutia LNG is now planned to consist of two phases, each having two trains of up to 4.5 million tons/yr, according to Korenkova. The first two-train phase is expected to produce 8.9 million tons/yr of LNG. The complete project will reach capacity of up to 18 million tons/yr of LNG and 1.5 million tons/yr of gas condensate, she said. The total investment is preliminarily estimated at some $25 billion, although that might be revised following the pre-Feed stage. The internal rate of return is estimated at more than 20%, Korenkova said. The project involves the expansion of a resource base in the Sakha (Yakutia) region, construction of gas preparation facilities and a 1,300 km (808-mile) gas pipeline to Ayan. Globaltek also plans to build a petrochemical plant in Yakutia’s Nizhny Bestyakh to process gas condensate, which will be transported from the fields via a 400 km gas condensate pipeline. Globaltek plans to use upstream assets of A-Property’s recently acquired Yakutsk Fuel and Energy Co. (Yatek) -- the Srednevilyusky, Mastakhsky, Tolonsky and Tymtaidakhsky license areas -- where production should be increased to 20 Bcm/yr-plus for the first phase from the current 1.7 Bcm/yr. The LNG plant will use the dual mixed refrigerant (DMR) liquefaction process and will be assembled in modules, Korenkova said. The plant is planned as a floating LNG facility on gravity-based platforms, with a mini LNG plant nearby for supplies to the domestic market. Russia’s LNG export champion Novatek also plans offshore LNG facilities on concrete gravity-based structures in the Arctic, of which the first, the 19.8 million ton/yr Arctic LNG 2 also designed by TechnipFMC, was approved in 2019 and is scheduled to start in 2023 (LNGI Feb.25'21). Vitaly Sokolov, Moscow

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