Russia's Novatek sees capacity of its 3rd LNG plant at 5 Mtpy

4/17/2019

Novatek, Russia’s largest private gas producer, has started to export liquefied natural gas (LNG) from its newly built small-scale LNG plant in Russia’s Baltic Sea port of Vysotsk.

Russia, one of the world’s top gas producers, aims to be a major player in LNG and to export as much as one of the global leaders in the market, Qatar. So far, Russia has two LNG plants in operation: Gazprom-led Sakhalin-2 on the Far East and Novatek’s Yamal LNG, on the Arctic Yamal peninsula.

Novatek, along with Gazprombank, has built but not yet officially launched its Vysotsk plant, which has a capacity of 660,000 tonnes of frozen gas per year.

Novatek’s Yamal facility exports both to Europe and Asia and has a capacity of 16.5 million tonnes of frozen gas per year, with the possibility of expansion.

According to Refinitiv Eikon flows data, Novatek shipped seven cargoes with a total volume of 67,800 cubic meters of frozen gas between March 31 and April 16 from Vysotsk.

Three cargoes were received by Lithuanian port Klaipeda, one each by the Finnish ports of Tahkoluoto (Pori) and Tornio, and the remaining two went to Visby and Nynashamn in Sweden.

PORTS OF ARRIVAL

The increase in Moscow’s LNG supplies comes at a time when Russia’s top gas producer Gazprom is facing tougher competition in Europe for its gas and opposition from a number of nations for its new gas pipeline projects.

Novatek’s shipment to Klaipeda also marks an important shift as the Baltic states, led by Lithuania, try to reduce their dependence on gas from Gazprom, their sole source for decades.

LNG, which can cost more than pipeline gas, allows for greater flexibility.

The Klaipeda LNG import facility, named “Independence”, was built in Lithuania in 2014 to break Gazprom’s monopoly on supplies to Lithuania, Latvia and Estonia.

In late 2017 it imported LNG from the United States and it plans to more than double its volumes.

Two of the three LNG cargoes which arrived at Klaipeda were bought by Achema, a privately-owned fertilizer producer, and the third was purchased by a unit of Lithuania’s state-owned energy firm Lietuvos Energija, via a trader, according to officials at Klaipedos Nafta and Lietuvos Energija.

Marko Toivonen, terminal manager at Pori, said Novatek’s cargo was bought by Gasum, Finland’s state-owned gas firm and transmission system operator.

The cargo arriving at Tornio was also bought by Gasum but then resold to Manga LNG Oy, which in turn is supplying the local industry and also LNG-fueled vessels, according to Manga LNG director Mika Kolehmainen.

Anders Nilsson, manager at Linde’s LNG terminal in the Nynashamn port in Sweden, said that Shell and Linde bought the cargo which arrived to that port.

He said at the Visby port, the LNG bunkering vessel Kairos, which is majority-owned by a Linde unit, is supplying Destination Gotland’s Visborg ferry.

Novatek did not reply to a Reuters request for a comment.

Additional reporting by Andrius Sytas in Vilnius and Nerijus Adomaitis in Oslo, writing by Katya Golubkova, Editing by Alexandra Hudson