Shell, Gazprom’s Russian venture Sakhalin LNG begins expansion work

By STEPHEN STAPCZYNSKI and ICHIRO SUZUKI
Bloomberg

Sakhalin Energy Investment Co., the only liquefied natural gas (LNG) exporter in Russia, has agreed to begin design work on an expansion, the joint venture said Friday.

The partners -- Gazprom PJSC, Royal Dutch Shell, Mitsui & Co. and Mitsubishi Corp. -- will add a third production unit at the Sakhalin-2 LNG export terminal to raise capacity by 4.8 MMtpy to 14.4 MMtpy, said Miyuki Shiga, a Mitsui spokeswoman. The design process will take about a year and the first cargo from the new unit is expected to ship early next decade, Shiga said.

Shell Global Solutions International and Giprogazcenter were awarded the design development contracts for the third production train, according to a statement by the venture, Sakhalin Energy Investment.

Shell, which owns a 27.5% stake in the project, has been discussing raising capacity since 2013.

While the partners have agreed on a budget for the expansion, there needs to be enough gas resources to justify new capacity and the company must finish the plans for the third unit before deciding if it will go ahead, Alexander Medvedev, Gazprom's deputy CEO, said in June.

Mitsui sees global LNG demand doubling by 2030, primarily driven by growth in Asia, according to a Dec. 8 company presentation.

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