US sanctions cycle doesn't stop Russia from moving forward with LNG project

Construction of the Baltic LNG project is proceeding despite US actions to block the project and other Russian liquefied natural gas (LNG) export plans, Upstream Online reported, citing energy giant Gazprom.

According to the Norwegian news site, the statement was made after Gazprom CEO Alexei Miller visited the construction site near the port of Ust-Luga last weekend – almost coinciding with the announcement of a new round of US sanctions targeting new Russian LNG projects.

Baltic LNG, which consists of two production lines with a capacity of 13.1 million tonnes of LNG per year, is part of a large wet gas processing complex to be built in the port city of Ust-Luga on the Baltic Sea. The complex includes a facility to remove ethane from the incoming hydrocarbon mix for further use in polymer production.

In a statement, state-owned energy giant Gazprom said construction of the Baltic LNG plant was more than 32% complete.

Russian President Vladimir Putin (left) and Gazprom CEO Alexei Miller, 2017. Photo: AP

According to the Russian government 's decision announced in late January this year, the country's National Welfare Fund (NWF) will provide the project with a loan of about 900 million rubles ($10 million) divided equally between the LNG plant and the ethane processing facility.

The Russian government said the total investment required for the program is estimated at more than 4.9 trillion rubles ($56.2 billion). About 2.88 trillion rubles ($33 billion) are being provided by Russian banks at preferential interest rates and another 1.2 trillion rubles ($13.8 billion) are being provided by the project's partners, Gazprom and private Russian gas company Rusgazdobycha.

Gazprom added that engineering work at the site and construction of access roads had been completed. About 15,000 people and more than 1,500 pieces of equipment were mobilized for construction work near Ust-Luga, according to Russia's largest energy corporation.

Orders have been placed for key equipment, including the entire long-haul line, and first deliveries are expected in the third quarter of 2024, Gazprom said.

Baltic LNG is managed by Ruskhimalliance, a joint venture between Gazprom and Rusgazdobycha.

Gazprom is responsible for transporting to Ust-Luga ethane-rich gas that the company extracts at high pressure and deep from the Achimov and Valanzhin formations in Western Siberia, as well as gas produced at the Tambey field cluster in the northeastern part of the Yamal Peninsula in Western Siberia.

In early June, the Russian government approved plans to divest the stakes of German oil and gas producer Wintershall Dea and Austrian energy company OMV in three joint ventures in West Siberia that produce wet gas from these formations.

Since 2021, Gazprom has designated parts of the trunk network to transport a separate wet gas stream from Western Siberia and the Tambey field via the existing trunk system to Baltic LNG. The company has upgraded gas pump compressors and laid new pipelines along the more than 2,000 km route to Ust-Luga.

The Baltic LNG project is being built in the port city of Ust-Luga on the Baltic Sea, in Leningrad, Russia. Photo: NS Energy

According to the Russian Government resolution, the first LNG production line at Baltic LNG is now expected to start operating in 2026-2027, while the timeline for the second production line is 2027-2028.

German industrial gas company Linde left the Baltic LNG project in 2022 to comply with international sanctions. Several private and Gazprom-affiliated subcontractors have filled the void left by the German company.

According to the Russian tender announcement, these are Gazprom Avtomatizatsiya, GSP-2, GSP-4, GSP-6 GSP-7, SSK Region, GSP-Service, Gazstroyprom and others. They are managed by the construction company Velestroy, which has an engineering, procurement and construction contract with Ruskhimalliance.

Last week, the US continued to expand sanctions against new Russian LNG projects, with the US Treasury Department sanctioning Rusgazdobycha after imposing restrictions on companies trading with Ruskhimalliance.

Echoing a similar decision by the UK in May last year, the US State Department added Ruskhimalliance CEO Kirill Seleznev to its list of sanctioned Russian citizens.

In December last year, the US placed three suppliers of Russian Baltic LNG – Northern Technologies, Kazan Compressor Machinery Plant and Gazprom Linde Engineering – on its sanctions list.

Minh Duc (According to Upstream Online)

Source: https://www.nguoiduatin.vn/vong-xoa-trung-phat-cua-my-khong-ngan-duoc-nga-tien-len-voi-du-an-lng-a669315.html