Putin fuels Russian gas ambitions with launch of $27bn plant

Yamal LNG project plans to export to Asia and Europe in icebreaking tankers

Russian president Vladimir Putin attends a loading ceremony of the ‘Christophe de Margerie’, an ice-class tanker, at the Yamal LNG plant in the Arctic port of Sabetta.

Russian president Vladimir Putin attends a loading ceremony of the ‘Christophe de Margerie’, an ice-class tanker, at the Yamal LNG plant in the Arctic port of Sabetta.

 

Vladimir Putin visited Arctic Siberia on Friday to celebrate the launch of a $27 billion (€23 billion) liquefied natural gas (LNG) development that will bolster Russia’s dominant role on global energy markets.

Russian gas producer Novatek has led the ambitious Yamal LNG project on the northern tip of Siberia’s remote Yamal peninsular in a partnership with the French oil major Total and the Chinese National Petroleum Corporation. The group plans to export LNG to markets in Asia and Europe in a fleet of ice-class tankers as Russia opens up navigation of its frozen Arctic Seas.

Novatek launched a first of three planned 5.5 million tonnes a year processing facilities at Yamal LNG earlier this week, but waited for Mr Putin, who has taken a keen interest in the project, before beginning to load an export tanker with the chilled liquefied fuel.

The Russian president arrived in the new port of Sabetta for a tour of the LNG site as temperatures sank below 28 degrees Celsius on Friday evening.

Yamal LNG “is an extremely important development for Russia,” Mr Putin said. “Before us stands the huge task of developing the Arctic and opening the northern sea route.”

Novatek and its foreign partners have succeeded in commissioning the first phase of the Yamal project on time and on budget, a rare feat in the global LNG industry. The group has also overcome the challenges of investing in Russia at a time when relations with the West are more strained than at any time since the Cold War.

Western sanctions introduced after Mr Putin ordered the annexed Ukraine’s Crimea in 2014 have aimed at stymying the expansion of Russia’s energy industries that account for about half of the country’s export revenues.

Bleak

Yamal LNG’s future appeared bleak when the US added Novatek to the sanctions list and blacklisted Gennady Timchenko, a personal friend of Mr Putin and one of the gas company’s main shareholders. But Chinese banks saved the day with an offer to cover the bulk of the project’s external financing needs with Russian state lenders making up the balance.

Plans are to ship most Yamal LNG to China and Asia during the summer months, but switch direction to Europe when the eastern route is too deeply frozen to navigate even with the help of icebreakers. At European terminals, LNG can be transferred to conventional carriers and moved to Asian markets via the Suez canal.