Novatek CEO confirms parameters of Murmansk LNG plant project

BELOKAMENKA, MURMANSK REGION. June 6 (Interfax) - Novatek CEO Leonid Mikhelson has confirmed the parameters of the project for constructing the natural gas liquefaction plant in the Murmansk Region.

"We are looking closely into the possibility of implementing the next project here in Murmansk. (...) Three lines of 6.8 million tonnes each could be placed here, two of which we plan to commission in 2027 and 2029. We have discussed the supply of electricity with Rosatom [state nuclear energy corporation] and Rosseti [power grid holding]. They welcome additional loading of available unclaimed capacity. We are already legally formalizing the future deliveries in order to take an investment decision. In order to take an investment decision, it is also necessary to construct an extended Volkhov-Murmansk gas pipeline of about 1,300 km in order to deliver resources to the project," Mikhelson told reporters after State Duma deputies had visited the Center for Constructing Large-Tonnage Offshore Structures.

Mikhelson said that the Murmansk LNG project would immediately resolve two issues: "There is a significant generation surplus of about 1 GW in the region, mainly at the Kola nuclear power plant. We could engage this capacity for our project. The non-freezing water area would also most importantly allow us to export products without having to use ice-class tankers."

Mikhelson also noted that the dry dock of the Center for Constructing Large-Tonnage Offshore Structures would be vacant for constructing the first line of the new project in 2024.

"Despite huge reserves, Russia currently occupies less than a 9% share on the global LNG market, with only the two large Yamal LNG and Sakhalin-2 plants as of today. They should have at least [a] 20% [share] according to their reserves. However, investment decisions have been taken to date, with only two projects being implemented: Novatek's Arctic LNG 2 with capacity of 20 million tonnes and Gazprom's complex in Ust-Luga at 13 million tonnes. In order to fulfill the presidential decree, it is necessary to take additional decisions on projects with overall capacity of about 30 million tonnes," Mikhelson said.

Mikhelson stressed that the Gryazovets-Ust-Luga gas transmission corridor is only 10% loaded. "Owing to a sharp reduction in pipeline exports, more than 90 billion cubic meters of pumping capacity are free. Three liquefaction lines in Murmansk require about 30 bcm per year," he said.

The Kommersant publication previously reported on construction of the Murmansk LNG project with capacity of 20.4 million tonnes as developed by Novatek. Deputy Prime Minister Alexander Novak confirmed the fact that the initiative was underway, noting that implementation was in line with the strategy to develop LNG, and that it was practical in order to develop the Arctic.