First LNG cargo ready to leave the Russian Arctic

Liquefied natural gas has a strategic element now that the United States is shipping the product to Europe.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  Dec. 8, 2017 at 6:11 AM
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Dec. 8 (UPI) -- French supermajor Total said Friday the first cargo of liquefied natural gas is leaving an Arctic facility in Russia, one of the largest in the world.

The French company holds a 20 percent stake in the Yamal liquefied natural gas project, alongside China National Petroleum Corp., with a 20 percent stake, and Novatek, Russia's largest independent gas company and the majority stakeholder. Total said the first cargo of LNG was ready for shipment as of early Friday.

"Together we managed to build from scratch a world-class LNG project in extreme conditions to exploit the vast gas resources of the Yamal peninsula," Total Chairman and CEO Patrick Pouyanné said in a statement.

The Yamal LNG project has the capacity to produce about 16.5 million tons of natural gas, and exports could target consumers in the Far East. Up to 16 ice-class carriers could be designated to ship LNG year-round to global consumers from the far north Kara Sea.

Pouyanne joined Russian Cabinet officials in June for a ceremony naming a tanker designated for Arctic LNG after former Total CEO Christophe de Margerie, who died in a plane crash in Moscow in 2014

The first train, the facility that converts gas to the liquid form, went into production early this week. Two more trains will be in service by 2019.

Energy consultant group Wood Mackenzie said it's rare for a project like Yamal to get off the ground on time and on budget. Samuel Lussac, Wood Mackenzie's senior Russian analyst, said operations will be tested, in part by its location in the harsh Arctic environment. By his read, getting LNG out of the region consistently could be a challenge.

LNG offers more options for delivery because there are fewer geopolitical risks than piped gas. European economies are vulnerable to those types of risk because most of the Russian gas they get moves through Soviet-era pipelines in Ukraine. The super-cooled gas has taken on a strategic value as the United States has started shipping its own LNG to some European countries that would normally depend on Russia.

The U.S. National Defense Authorization Act states that U.S. efforts should promote European energy security with backing for expansion of its own gas infrastructure, as well as growth of trade in LNG.

"This giant project would not have been possible without the power of our partnership with Novatek and displays Total's commitment to Russia," Pouyanné.

Novatek had no statement on Friday's shipment. Yamal moves the company toward becoming a global player, however, which Chairman Leonid Mikhelson said marks "a new chapter in our corporate history."

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