Novatek to Start Arctic Route Late

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Russia’s Novatek will start LNG shipments via the direct Northern Sea Route (NSR) to Asia later this year than in 2020, CEO Leonid Mikhelson said. Amid overproduction at Yamal LNG, Novatek lacks a sufficient number of ice-class tankers and doesn't yet have its transshipment terminals up and running. Last year, Novatek opened the NSR navigation season in late May, earlier than in 2019 when the first cargo was sent in July. This year, it also wanted to start the season early, in April-May (LNGI Feb.16'21). But now it plans this navigation season’s first NSR shipment in mid-June, Mikhelson told a briefing last week. Novatek sent two cargoes in January and February this year, but that was the late closure of the previous navigation season. NSR shipments are key to Novatek’s plans to reduce transportation costs for Yamal LNG and future projects in the Arctic where it plans to produce up to 70 million tons per year by 2030, with at least 80% to be sold in Asia. An NSR delivery takes an average 15 days instead of 36 days via the westbound route through the Suez Canal to Asia, which is why Novatek seeks to send more cargoes east. In the winter of 2024-25, it wants to start year-round navigation, which will depend on the availability of more Arc7 ice-class vessels and icebreakers. Its Not About the Weather The late start this year has nothing to do with the weather or ice in the Arctic seas, Mikhelson said. The main reason is that the fleet of 15 Arc7 ice-class tankers of Yamal LNG is not enough to evacuate much LNG via the eastbound route when the plant operates at 114% of capacity as it does now, he said. Although the direct NSR route is shorter than the one via Suez Canal, Novatek has no transshipment terminals yet to reload cargoes from Arc7 tankers which have to go all the way to receiving terminals and back to Sabetta, Yamal’s home port (LNGI Apr.28'21). It is much faster for Novatek to reload cargoes from Arc7 tankers in northwestern Russia or in Europe to conventional vessels which can then go anywhere including Asia via the Suez Canal. A reload scheme allows for increasing the number of journeys for each Arc7 tanker. Yamal Train 4 Adds to Pressure The recently launched 900,000 ton/yr Train 4 of Yamal LNG adds to the logistics pressure on the overproducing plant, Mikhelson admitted. He confirmed that the troubled train has finally ramped up after more than a year of delay (LNGI Jun.1'21). As agreed by project partners, Train 4 is officially launched if it operates at 75% of capacity for at least 72 hours, and that requirement has been met, Mikhelson said. “I consider the train to have been launched,” he said. He admitted that some problems with equipment persist and the train will undergo shutdowns in the next couple of months to readjust the equipment. The train uses Novatek’s new proprietary Arctic Cascade liquefaction technology and relies solely on Russian-made equipment, most of which has never been produced before in the country, Mikhelson explained. Yamal Can Produce More The first three trains of Yamal LNG produced a record 18.8 million tons last year, exceeding the 16.5 million ton/yr nameplate capacity by 14%, but they have the ability to add another 400,000-500,000 tons/yr in production, according to Mikhelson. With Train 4 reaching its full capacity, Yamal’s total annual production may exceed 20 million tons/yr, Mikhelson said. He did not say how much he expects Yamal LNG to produce this year. Novatek has tested two of the three large trains of Yamal and concluded that at ambient temperature below minus 25°C the trains can operate at 120% of capacity, Mikhelson said. The third train has yet to be tested, he said. Vitaly Sokolov, Moscow

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