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2018 December 10

There is gas but no money

NOVATEK, key cargo shipper on the Northern Sea Route, has ambitious plans on creation of infrastructure for LNG shipments though state financing is lagging behind so far. The plans on construction of transshipment facilities in Murmansk and Kamchatka requiring application of unique technologies can be challenged by insufficient financing of the NSR infrastructure including that of Sabetta.

Imports phase-out in logistics

Shipments of liquefied gas from the Gulf of Ob and Gydan to the sales markets is not an ordinary logistic task. As it is known, Sabetta port serves as a shipment facility. Then, it is reasonable to transship gas from ice-class tankers to conventional ones at the NSR exit points. That will let considerably decrease logistics costs and the number of costly ice tankers involved.

Transshipment of NOVATEK’s LNG is takes place in Norway. In late November, its joint venture Yamal LNG completed the first ship-to-ship LNG transshipment in the area near the port of Honningsvag in northern Norway. 

NOVATEK is looking into implementing large-scale LNG transshipment projects in Kamchatka and the Murmansk region in the future. The company is thus going to build an efficient logistics chain for its LNG projects.

The Ura Bay is seen as best place for an LNG facility in the Murmansk Region,  the Bechevinskaya Bay – in Kamchatka. 

As Maksim Minin, Head of Port Engineering at NOVATEK’s LNG Project Department, told IAA PortNews at the Neftegasshelf-2018 conference in Moscow, the facility will include a floating storage unit – a non-self-propelled vessel for 360,000 cbm of LNG (earlier, he mentioned two storage units at each facility). 

The locations selected for the storage units feature a depth of up to 150 meters and strong current (3 knots in Murmansk) and even a risk of tsunami (in Kamchatka), the storage units are to secured with a unique system of anchors and high strength chains (16 chains with anchors in Murmansk and 32 chains and anchors in Kamchatka).

Costal infrastructure in the Murmansk region is planned for construction in the settlement earlier used by military personnel. As of today, the buildings are in good condition and they are not occupied. The coastal infrastructure will most probably include one building to accommodate representatives of federal authorities and NOVATEK as well as engineering infrastructure which already available at the site. It just should be adjusted for new purposes. 

Besides, there is a plan to build a berth for port fleet in the Murmansk region as well as facilities ensuring safe navigation upon approval of Rosmorport. The Ura Bay is not far from Murmansk – about 40 kilometers. A It is connected with the city by a motorway so no problems are expected with communications and logistics. Cargoes can be delivered both by sea and by land.

In Kamchatka, the situation is more challenging because of remote location of the site from infrastructure facilities. Therefore, construction of an autonomous infrastructure is supposed there. Connection with the mainland will by possible by sea alone. Besides, the access canal has some shallow sectors of about 3 meters deep. So, the scope of dredging works planned in the area is estimated at over 10 million cbm. The company will perform more precise estimations in spring 2019 when the dedicated survey is completed. Creation of vessel traffic management system (VTMS) is also under discussion.

The Kamchatka project has reached a higher level of development as compared with the Murmansk project.

Nevertheless, both facilities are to be put into operation simultaneously. Their first turns are to be launched in 2022, the second ones – in 2023.

Annual capacity of each transshipment facility is to make 20 million tonnes.

LNG bunkering is not planned at gas transshipment facilities so far, though Sovcomflot was earlier speaking about its necessity. Yet, Maksim Minin told IAA PortNews that could be arranged in the future. As Aleksandr Strashny, Development Director, ZAO GT Morstroy (designer), told IAA PortNews at the Oil Terminal 2018 congress in Saint-Petersburg, bunkering can be arranged at the berths intended for transshipment of project cargo at the port of Sabetta.

Arctic key-keepers

As for Sabetta, its infrastructure needs even more development for shipment of the planned gas volumes.

When speaking at the VIII International Forum "Arctic: Today and the Future", Yury Tsvetkov, Deputy Minister of Transport – head of Rosmorrechflot (Federal Marine and River Transport Agency) said that the Law on the Federal Budget for 2019-2021 foresees the reduction of the NSR project financing by RUB 24 billion due to the Government’s decision to build two more nuclear-powered icebreakers.

Yury Tsvetkov reminded that the project summary issued earlier contained well-defined terms of infrastructure facilities construction as well as their financing, year by year. Under the project, the state is to expand the water area of Sabetta, create additional ice protection facilities, widen an access canal, ensure operation of FSUE Hydrographic Company and perform activities focused on safety.

“However, - he said, - first financing of the mentioned works is expected after 2020 (designing is not to begin before 2020 – Ed.) Therefore, NOVATEK has fairly questioned the necessity of building on-shore facilities ahead of schedule with the resources for the development of water area expected only in 2020”

He explained that the access canal to Sabetta is to be widened twofold from the current 295 meters. Besides, there was a plan to increase subsidies provided to the hydrographic company. As of today, the fleet of FSUE Hydrographic Company services 37,000 virtual kilometers which is to be increased to 80,000 kilometers per year. This can be achieved with the subsidies increased to RUB 823 million which has not been confirmed yet. The approved budget foresees only RUB 400 million. High-latitude routes should be deployed with the increased number of large ships on the NSR lanes. For that purpose, Hydrographic Company is to increase the scope of surveying works. 

Yury Tsvetkov also said that Marine Rescue Service will need more vessels.  Taking into consideration their unique functions, it will take long to have such ships designed and built. There are also issues related to upgrading and expansion of the fleet of buoy tenders and survey ships.

Sergey Vakhrukov, Deputy Secretary of the Security Council of the Russian Federation, emphasized the necessity of a comprehensive approach to principal issues of the NSR loading and development. “Otherwise, we will not reach the targeted throughput of 80 million tonnes by 2024”, he said.

According to Yury Tsvetkov, the problems were described to Prime Minister Dmitry Medvedev and soon will be discussed at the meeting involving stakeholders at Sabetta port (on 11 December 2018, according to information provided to IAA PortNews).

It should be noted that the third (final) reading of the draft law on the Northern Sea Route administration has been also scheduled for December 11. According to the bill, the bulk of authority is handed over to Rosatom Corporation which is to have its plans approved by the Ministry of Transport under the “two-key” principle.

When speaking at the Transport Week in Moscow, Igor Levitin, Aide to the President of Russia, said that the Ministry of Transport and the Federal Agency together with Rosatom should develop well balanced regulatory instruments to see who is responsible when we fail to achieve the planned result of 80 million tonnes.

Taking into consideration the above mentioned facts, the list should also include the Ministry of Finance.

Vitaly Chernov