Russia\u2019s largest LNG (liquefied natural gas) producer is looking to boost supply to the fast growing Asian markets by upgrading its facilities in the Far East.<\/p>\n
While Russia\u2019s gas giant Gazprom is working to complete the Power of Siberia gas pipeline expected to begin delivering gas to China in December 2019, another Russian company \u2014 the country\u2019s biggest liquefied natural gas (LNG) producer Novatek \u2014 is looking to boost LNG supply to the growing Asian market. <\/p>\n
While it continues to keep more than a third of the European gas market with pipeline gas supply, Russia is also increasingly looking east and aiming to take a larger portion of the booming Asian LNG demand, led by China. <\/p>\n
Novatek has one producing LNG plant, Yamal, and aims to reach a final investment decision (FID) on another one, Arctic LNG 2, this year.<\/p>\n
The Russian firm has recently signed a preliminary agreement with Japan\u2019s Saibu Gas, under which the companies will consider potential cooperation in entering the end-consumer LNG market in Asia. Novatek will optimize its LNG supplies to the Asia-Pacific region by using Saibu Gas\u2019s Hibiki LNG terminal in Japan.<\/p>\n
\u201cThe Asia-Pacific region is a priority destination for NOVATEK\u2019s LNG projects. Our ability to use the Hibiki terminal will help diversify our customer base and increase the flexibility of deliveries to the premium LNG markets,\u201d Novatek\u2019s First Deputy Chairman of the Management Board Lev Feodosyev said last month. <\/p>\n
Novatek also plans to build, with the support of Russia\u2019s government, a marine LNG transshipment complex in the Kamchatka Peninsula in Russia\u2019s Far East, close to the Asian markets.\u201cThe construction of the Kamchatka transshipment complex will increase the efficiency of LNG deliveries from the Arctic zone by optimizing transport logistics,\u201d Novatek\u2019s Chairman of the Management Board, Leonid Mikhelson, said last September.<\/p>\n
\u201cWe plan to create a Russian LNG hub for shipments to consumers in the Asia-Pacific region. This investment will contribute to the development of the Northern Sea Route allowing for the optimal use of the existing Arctic tanker fleet,\u201d Mikhelson noted.<\/p>\n
Japan\u2019s Saibu Gas, for its part, said this week that it would consider building two additional LNG tanks and upgrade its re-exporting capability.<\/p>\n
Thanks to LNG storage hubs closer to Asian markets, Novatek could cut shipping costs and better meet spot demand in Asia, China in particular, according to analysts who spoke to Bloomberg.<\/p>\n
Given its LNG sources are very far from Asia, storage and re-loading will enable it to capture shorter-term arbitrage opportunities,\u201d Wood Mackenzie analyst Nicholas Browne told Bloomberg.<\/p>\n
Russia\u2019s LNG supply focus on Asian markets is not surprising at all, considering that natural gas demand in Asia, and China specifically, will continue to grow.<\/p>\n
China\u2019s natural gas imports by pipeline and as LNG hit another record in December 2018 amid the Chinese government\u2019s push to have millions of households switch from coal to natural gas for heating. Total natural gas imports for full-year 2018 soared by nearly 32 percent annually to 90.39 million tons, solidifying China\u2019s position as the world\u2019s biggest importer of the fuel.<\/p>\n
Novatek has yet to make the FID on the $27-billion Arctic LNG 2 project, but analysts widely expect that it will reach FID this year.<\/p>\n
France\u2019s Total, a partner in the operating Yamal LNG project with 20 percent, expanded last year its partnership with Novatek, and the French group now has the opportunity to buy a 10-15-percent direct interest in Arctic LNG 2.<\/p>\n
Reports have it that various other potential partners, including Saudi Aramco, are vying for a stake in Arctic LNG 2. According to Wood Mackenzie, Novatek will aim to reach FID on Arctic LNG 2 this year, and at least one new investor will join the project in 2019. The LNG project in Russia is one of the frontrunners to reach FID this year, alongside one LNG project in Mozambique, Golden Pass, Calcasieu Pass, and Sabine Pass Train 6 in the United States in what could be a record year for LNG project approvals, WoodMac says.<\/p>\n
While keeping a grip on the European gas market, Russia looks to boost LNG deliveries to the growing Asian market with storage hubs close to end-users to reduce freight costs and increase flexibility in deliveries.<\/p>\n","protected":false},"excerpt":{"rendered":"
Russia\u2019s largest LNG (liquefied natural gas) producer is looking to boost supply to the fast […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-717","post","type-post","status-publish","format-standard","hentry","category-news"],"yoast_head":"\n