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Sechin eyes LNG plant in Yamal

Rosneft President Igor Sechin could go for a LNG plant in the Arctic peninsula of Yamal.

Rosneft intends to produce gas at its huge fields in the Kara Sea and has started to look at the possible construction of a LNG plant in the nearby Yamal Peninsula. The plant could be located alongside similar plants operated by Novatek.

Location

Rosneft President Igor Sechin has long made it clear that his company intends to produce not only oil in its Arctic fields, but also gas. In 2013, his company got the government’s blessing of an engagement in the production and export of LNG and it is now starting to look at possible sites for future production plants. Sechin confirms that one LNG plant will be built at Sakhalin in the Russian Far East. A second plant could be based in Yamal, the strategically important Arctic peninsula.

Rosneft has a great number of offshore Arctic licenses and will in summer this year drill a historical first well at the Akademicheskoye structure in the Kara Sea. The Kara Sea projects are developed in cooperation with ExxonMobil. If major gas discoveries are made in the area, a LNG plant will soon come in the agenda.

If Rosneft decides to build a LNG plant in Yamal, it will follow suit with Novatek, the company which together with partners Total and CNPC are developing the Yamal LNG project. The plant will have an annual production capacity of 16.5 million tons and will be operational by 2017. As recently reported, Novatek and its partners have also started to plan a second LNG plant in Yamal.

Rosneft’s LNG plant in Yamal would be able to use major parts of the infrastructure, which currently is being developed by the Russian state together with Novatek. Big sums are being invested in the Sabetta Port, which will become the regional infrastructure hub able to serve LNG carriers and other vessels. Reportedly, the Sabetta port will by year 2020 have a 30 million ton capacity.

However, Rosneft’s LNG plant could ultimately be less competitive than the ones operated by Novatek. According to newspaper Vedomosti, the Rosneft plant could end up costing between $30-40 billion, significantly more than the plant currently developed by Novatek. The main reason is the complex offshore waters from where the company intends to extract the gas.