Baltic LNG: design and construction

A plant for the production of liquefied gas is planned to be built near St. Petersburg, near the seaport of Ust-Luga . The large-scale project is estimated at 1 trillion rubles of investment.

Prerequisites for construction

Despite the fact that the pipeline gas is lower in purchase price than liquefied gas, there is a stable tendency to increase the consumer demand. In connection with this, the management of Gazprom took a decision on the construction of facilities designed to provide lucrative contracts and saturate the market with a demanded product. The projected plant, the Baltic LNG, will be located in the Leningrad region, namely on the site in the area of the port of Ust-Luga.

In addition to macroeconomic prospects, the construction of the Baltic LNG will solve some problems in the Leningrad region, several branches of gas pipelines and processing facilities will be built. In addition, it is planned to arrange the supply of natural gas to the Kaliningrad region, having built the necessary infrastructure for this.

Objectives

The priority goals of the Baltic LNG project are the supply of liquefied gas to Europe, as well as to India and the countries of Latin America. An additional objective of the company's construction is to increase the low-tonnage supply stream in the Baltic, and also to service the market for refueling the ships with fuel (bunkering).

Project

The design capacity of the enterprise is laid at the level of ten million tons of liquefied gas per year, with the prospect of increasing production to fifteen million tons per year. The final decision on the laying of the enterprise was announced by the heads of Gazprom in April 2015. The construction of the Baltic LNG is planned to be completed in 2020. In the fourth quarter, according to the announced plan, the first batch of products must be shipped. According to the latest publications in the media, the completion of construction is postponed to 2021-2022, but there are no official comments on this.

The project comprises three parts:

• Baltic LNG.
• Pipeline.
• Port terminal for reloading containers with gas to tankers.

The initial cost of construction was estimated at 460 billion rubles, the rise in price occurred only in ruble terms, since all the necessary equipment will be purchased abroad. In dollar terms, the cost of the project has remained unchanged.

The construction will be carried out by Gazprom's subsidiary Gazprom LNG St. Petersburg. Partners in the implementation of the plans are the corporations Gazprom and Shell, negotiations are underway with Mitsui, Mitsubishi. About six thousand people will build the Baltic LNG. The general designer of the investment justification is the design institute of OAO Giprospetsgaz. About two and a half thousand specialists are involved in the construction of the gas pipeline.

The participants

Several investors will be involved in the implementation of the Baltic LNG project. Gazprom decided on one of the leading participants in the construction of the future plant. Within the framework of the St. Petersburg International Economic Forum held in June 2016, the corporation signed a memorandum with Royal Dutch Shell, which confirms the intentions of the parties.

And although the German concern expresses an active desire to participate in the construction, nevertheless, the treaty on this was never signed, limited only to assurances of desires. Most experts attribute the suspicion of the German concern to European sanctions against the Russian Federation. At the moment, there are negotiations on the value of Shell's share in the project.

In the justification of the project it is a question of the possibility of obtaining by the general shareholder a stake in 49% of shares. Negotiations continue, but in backstage conversations, information is confirmed that Shell can get almost half of the plant. The reason for this decision is the fact that the German concern is ready to provide the technology for liquefying gas.

In July 2016, it was announced that the structure of the participants in the construction of the Baltic LNG project could undergo changes. The desire was declared by Japanese companies, which have experience in the Russian market in the implementation of the Sakhalin-2 project.

Select a designer

The list of priorities for Gazprom includes the Baltic LNG. The design of the complex is in the stage of choosing a general contractor. Experts call several companies with which Gazprom has already cooperated in the process of solving other problems. In this row is VNIPIgazdobycha OJSC - in the past the general designer of a similar enterprise in Primorye (the project is not implemented).

Also called the Research Institute of OAO Gazprom Promgaz, one of the oldest enterprises in the industry. But the most likely to receive an order remains with OAO Giprospetsgaz (St. Petersburg). One of the structural units of this company deals with LNG issues and has experience in implementing tasks similar to the Baltic LNG project (plant). A certain part of the work has already been done by the enterprise - it justified the investment.

Additional production

The future Baltic LNG will be located on the lands of the Ministry of Defense, which is a hundred meters from the industrial zone of the port of Ust-Luga. An important part of the implementation of the entire construction array is the gas pipeline. It is to be stretched from the city of Volkhov in the Leningrad region. Financing is highlighted in a separate article, which speaks of an independent industrial and commercial unit. The gas pipeline will supply raw materials directly to the plant and other consumers. Financing of the construction will be carried out from the gasification program for consumers.

The capacity of the pipeline is projected at 34 billion cubic meters per year, the first stage of LNG will require 16.8 billion cubic meters. The remaining gas consumers are still in the planning stage. There is a project for the construction of two methanol plants. The third part of the large-scale LNG project is the marine terminal.

Long story

The first projects for the construction of LNG were considered by Gazprom in 2004. At first they intended to build a plant in Primorsk, its design capacity was 7 million m ³ / year, it was planned to supply the products to the USA and Canada. In 2007, the idea was abandoned in favor of a promising LNG at the Shtokman field, which was also conserved, deciding to abandon all efforts for the construction of the Nord Stream gas pipeline.

The idea to build LNG in the Leningrad region returned in 2013. The choice lay between the sites in the regions of Vyborg, Primorsk and the port of Ust-Luga. The final decision in favor of the port was made in early January 2015. The basis was served by several advantages in the form of a convenient fairway of passage of ships, safety of ice conditions. An important role was played by the plans of the Leningrad region authorities to build a vast industrial zone, which should include about six oil refineries and gas chemical complexes, which requires gas supplies of up to seven billion cubic meters.

Expected effect

According to experts of the energy market, the construction of the Baltic LNG will provide an opportunity to deliver Russian gas to those European countries where the pipeline does not reach. In particular, Spain is indicated, where there are energy-intensive industries, consuming only liquefied fuel, imported in large quantities. The Portuguese market, the French coast, and also the southern regions of Italy are no less promising. A large consumer of the liquefied resource is Great Britain, although gas is transported through a pipeline to a rather large volume.

But experts have doubts about the demand for foreign consumers of Russian liquefied gas. This market with high competition is occupied by long-time players, you can win back part of it only by lowering the cost of supplies. As far as this is possible, it is not yet possible to say. The construction of the Baltic LNG will play a positive role for the local region, which risks remaining without gas supply after leaving the single energy ring of the Baltic countries. The construction of the branch of the gas pipeline not only removes the problem, but also gives impetus to the development of industry in the Leningrad region.