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Remote Russian Region Advances Plans for LNG Receiving Terminal

Plans for a new liquefied natural gas (LNG) receiving terminal in Russia’s Far East are progressing, despite ongoing concerns over delivery timelines for a floating regasification unit (FRU) and shuttle LNG carriers.

Currently, most of the gas produced in the Kamchatka Peninsula is used at two power and heating facilities in the regional capital, Petropavlovsk-Kamchatsky. Additional diesel is imported from Asia during long winters to offset declining local gas output from aging fields operated by state-controlled Gazprom.

Following Gazprom’s failure to discover additional natural gas reserves near two of its fields in western Kamchatka, the Russian government endorsed the regional authority’s LNG terminal plans. The country’s largest independent gas producer, Novatek, has been tasked with securing the FRU and LNG carriers for the project. The FRU is set to be installed at a port near Petropavlovsk-Kamchatsky, with two carriers transporting LNG from the Sakhalin 2 project in Russia’s Far East.

Sakhalin 2, located in southern Sakhalin Island, was Russia’s first LNG project. It is now managed by Gazprom, which took full control after Shell exited following Russia’s invasion of Ukraine in early 2022. The two-train plant, with a nameplate capacity of 9.6 million tonnes per annum (tpa) of LNG, can now produce between 11 and 12 million tpa following debottlenecking efforts.

Kamchatka’s regional authorities are advancing their plans by issuing a tender for a turnkey contract to build the project’s onshore support infrastructure. Construction is set to start later this year and be completed by the end of 2025.

According to the tender notice, a single contractor will be responsible for constructing all required infrastructure at a maximum cost of about 13 billion roubles (US$144 million). Applications to participate in the tender are due by June 10. The project includes constructing a mooring berth at Rakovaya Bay, large-scale revetment works, power networks, a backup diesel power station, water and discharge networks, a 10-kilometre gas pipeline link, two LNG storage tanks, access roads, communication lines, automation facilities, lighting, and nature remedial works.

The receiving terminal will handle close to 450,000 tpa of LNG and accommodate 55 LNG carrier arrivals annually. In 2023, the Russian government pledged 12 billion roubles for the onshore receiving facilities. Novatek is investing 40 billion roubles in the FRU and the LNG carriers but will sell the FRU to Gazprom upon completion, with Gazprom taking over operations.

Among the FRU options for Novatek, upgrading an existing LNG carrier is under consideration to overcome challenges in ordering a new unit. A report by Aleksandr Klimentyev, vice president of the Russian National LNG Association, listed 14 legacy LNG carriers with suitable storage capacities, with the Coral Energice vessel deemed most suitable. However, Russian yards lack the capacity to convert a legacy LNG carrier into an FRU, so this work would need to be outsourced.

Novatek has been contacted for comment.

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