Novatek plans to build a 20 Mt/y LNG terminal in Kamchatka (Russia)

The Russian independent gas producer Novatek plans to build a 20 Mt/y LNG loading terminal off the Kamchatka coast (far east Russia) but neither the commissioning date nor the investment amount was disclosed. As of today, it is not sure whether it will be an offshore or onshore terminal. The rationale behind the project is to reduce LNG transportation costs on the Northern Sea (NS) route. Novatek aims at reducing the use of ice-class LNG tankers because they are more expensive than conventional ones.



The NS route has become the most preferred option for the transportation of LNG between the Norwegian and Russian gas production sites and the East Asian markets, which can now be connected in 15 days. Although ice-class LNG carriers exist, none of them is able to move through thick ice in traditional icebreaking mode and Daewoo Shipbuilding & Marine Engineering (DSME) is building new LNG ice-breaking carriers for this purpose. As of today, 15 ARC7 ice-class LNG carriers are being built to load the output from the Russian gas production sites such as the Yamal LNG project (Yamal peninsula, Russia). The first one, the Christophe de Margerie prototype ice class LNG carrier, has been built under a US$320m contract with the Russian shipping company Sovcomflot and has been released in November 2016. However, these carriers are expensive and Novatek believes that the construction of a LNG terminal in Kamchatka can enable the increased use of cheaper vessels and provide significant savings on deliveries to East Asia if the construction costs are not too high.