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Pechora LNG faces bleak future

Flags could be taken down in the Pechora LNG project.

The projected LNG plant on the Nenets tundra will crash without the support from Gazprom.

Location

Project operating company Alltech is hectically trying to get Gazprom onboard in its planned construction of a LNG plant and adjacent infrastructure in Indiga on the Russian Arctic coast

According to newspaper Kommersant, Alltech leader Maksim Barsky is considering to sell a majority stake in the company to the gas monopolist.

The recent liberalization of Russian gas export legislation did not include Alltech, and there appears to be no other options for the project developers than to team up with the gas giant. The gas export liberalization which came into effect on December 1 includes only Rosneft and Novatek, in addition to Gazprom.

The new regulations allow Rosneft to export LNG from its Arctic fields, and Novatek to export from its Yamal LNG. Meanwhile, Gazprom remains the only company allowed to export LNG from land fields.

Alltech intends to export an annual 2,6 million tons of LNG from its Pechora project, all of it by ships through Arctic waters. The resources are to come from the Kumzha and Korovinskoye gas condensate fields in the Nenets Autonomous Okrug. The planned plant is located on the coast of the Pechora Sea, about 230 km northwest of regional capital Naryan-Mar. A 80 km long pipeline is to connect the two fields with the coastal terminal.

However, Gazprom might not be interested in engaging in the Pechora project. The company is from before engaged in the planning of new LNG projects in the Baltics and Vladivostok and from before stretched in capacity.

Talks between the sides have been taking place for several years without any significant result. As previously reported, a working group which included Alltech, Gazprom and the Nenets AO regional administration was set up in early 2012 with the aim to form an alliance.