LNG Projects in Russia’s Far East Eyed to Increase Exports

18 July 2018: 

Liquefaction projects in Russia’s Far East could play an important role in furthering the world’s second-largest gas producer’s plans to also become a top LNG exporter.

The Far East LNG projects are part of Russia’s strategy, along with Novatek’s two Arctic projects on the Yamal and Gydan peninsulas and Baltic LNG in near Saint Petersburg, to boost gas exports. Many of its large-scale pipeline projects in Eurasia will be completed by the mid-2020s, so the focus will be on LNG to increase Russian exports, with the government providing special tax breaks for liquefaction projects.

Operators in the Far East are still discussing the configuration of their export projects but will need to decide soon. After only two final investment decisions (FID) for large scale liquefaction globally in the last few years, many producers around the world are looking to take FID on new projects in 2018 and 2019 to take advantage of perceived supply gaps into the 2020s.  

Two main projects are being considered in Russia’s Far East. Sponsors of the existing two-train 10-MMt/y Sakhalin 2 project on Sakhalin Island want to expand the facility with a third 5-MMt/y train. At the same time, Sakhalin 1 sponsors are trying to decide whether to supply gas to Sakhalin 2’s train 3 expansion or build their own project, Russian Far East LNG (RFE LNG). Sakhalin 1 has been producing crude since 2005 but associated gas is only used locally for power generation and regional heating.

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