Russia approves €1 billion LNG transshipment terminal on Kola coast

The hub, along with a Pacific Ocean one in Kamchatka, will allow Novatek to ship LNG more cheaply and efficiently.

By Atle Staalesen, The Independent Barents Observer - May 1, 2019
The Christophe de Margerie, an ice-class tanker fitted out to transport liquefied natural gas, is docked in Arctic port of Sabetta, Yamalo-Nenets district, Russia March 30, 2017. (Olesya Astakhova / Reuters File Photo)

The Russian federal government intends to spend 70 billion rubles (€965 million) on the construction of a new major Arctic terminal for storage and reloading of LNG. The project investment plan was this week approved by Prime Minister Dmitry Medvedev. It is to stand ready for operations in year 2023.

According to the government instruction, the investment plan includes the building of two floating storage facilities, a support landing pier and necessary coastal infrastructure.

The announcement comes only few weeks after the government approved a similar terminal project on the country’s Pacific coast, in Bechevinka on the Kamchatka Peninsula.

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The two terminal facilities will both serve natural gas company Novatek and its major development of new LNG projects in the Arctic. The Yamal LNG is already producing up to 16.5 million tons of LNG. A second project, the Arctic LNG 2, is under development and will ultimately deliver 19.8 million tons per year.

The government document does not specifically say where in the Kola Peninsula the new terminal is to be built. However, Novatek has earlier made clear that it wants it to be located in Ura Guba, the fjord that houses one of the Northern Fleet’s most important naval bases.

Ura Guba is located about 50 kilometers to the northwest of Murmansk. It has a deep and year-round ice-free fjord, and is considered among the most favorable spots for shipping and logistics on the Kola Peninsula. The local Navy base today houses several nuclear-powered submarines, including Sierra-II and Victor-III vessels.

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The new terminals will enable Novatek to cut LNG transportation costs. The top class ice-protected Arc7 tankers that today shuttle to and from the seaport of Sabetta in Yamal are far more expensive to operate than conventional tankers. With transshipment hubs, the ice-class tankers will shuttle LNG to those new terminals and conventional tankers will pick up the natural gas and deliver it to customers in Europe and elsewhere.

Since late 2018, Novatek has engaged in ship-to-ship reloading of LNG in the Norwegian Sarnes Fjord. These operations will later this year be moved to Russian waters, Novatek leader Leonid Mikhelson has confirmed, but ship-to-ship reloading is due to continue until the permanent terminals are ready.