Novatek Orders World’s Largest Floating LNG Storage Unit for Arctic

Novatek contracts South Korean DSME to build two massive LNG barges to serve as transshipment hubs near Murmansk and Kamchatka optimizing LNG export from the Arctic to Europe and Asia.

FROM MALTE HUMPERT

Novatek, Russia’s largest private natural gas company, took another step in optimizing its transport logistics along the Northern Sea Route (NSR). Daewoo Shipbuilding & Marine Engineering (DSME) and Novatek signed a deal for the construction of two massive LNG (liquefied natural gas) storage barges totaling $748m. Delivery is expected in 2022. Novatek had first announced plans for a transshipment hub in 2017.

The floating LNG storage units will serve as permanent transshipment facilities located near Murmansk and off the Kamchatka peninsula at the western and eastern termini of the NSR.

LNG barges are floating LNG terminals which receive and store natural gas before transferring it onwards to another vessel. The units will be the world’s largest floating LNG storage holding 360,000 cubic meters (cbm) of LNG, several times larger than existing units. Each barge will cost just over $374m and the contract contains an option for two additional barges.

Final step in logistics puzzle

The barges will allow Novatek to significantly reduce its transport costs. The two new barges thus represent a crucial final step in optimizing Novatek’s export logistics from the Arctic to Europe.

The floating LNG storage units will be used as transshipment hubs at both ends of the NSR. Novatek and its shipping partners use highly specialized ice-capable Arc7 vessels to transport LNG from the point of production on the Yamal peninsula in the Russian Arctic to Europe or Asia. Ideally, the company will restrict the use of Arc7 vessels to the icy parts of the voyage before transferring the LNG to conventional LNG carriers which are cheaper to build and run more efficiently.

Currently, the Arc7 ships either travel the full distance or alternatively Novatek uses ad-hoc and temporary ship-to-ship transfer of LNG. For that purpose the company has partnered with Norwegian shipping company Tschudi in 2018, 2019, and 2020 to transfer up to 15 million tons of LNG near Honningsvåg off Norway’s northern coast. The company and Norway faced substantial criticism from the United States for cooperating with Russia.

Continued partnership with DSME

DSME is one of the world’s largest shipbuilders and has previously cooperated with Novatek on the design and construction of the first batch of 15 Arc7 icebreaking LNG carriers. The first vessel of this type, Christophe de Margerie, which was delivered in 2017, just completed a record-early transit along the NSR delivering LNG to China in May, two months earlier than previous voyages.

The LNG barges are large enough to receive cargo from two Arc7 LNG carriers, which each hold 172,000 cbm of LNG. Yamal LNG produces around 16m tons of LNG per year. With the construction of Arctic LNG 2, another LNG project in Russia’s Arctic, production will more than double to 38m tons, likely necessitating additional barges to provide enough storage capacity at the transshipment location. Novatek retains options for two additional barges as part of the contract.

Specific details of the deal with Novatek remain confidential, explained a source at DSME to High North News. The company, however, revealed to HNN that the units will be 400 meters long, by 60 meters wide and 30 meters tall. No images have yet been released of the barges.

Original source: https://www.highnorthnews.com/en/novatek-orders-worlds-largest-floating-lng-storage-unit-arctic

History - 2 years ago

Novatek Releases Details of Kamchatka LNG Hub

Novatek, the developer of the Yamal LNG terminal in the Russian Arctic, is finalizing its plans for the construction of a transshipment hub on the Kamchatcka Peninsula. The hub would allow it to improve the utilization of its vessels as it seeks to expand operations.

When fully built out, Yamal LNG will export 17 million tonnes of LNG per annum (MTPA) to Asian and European markets. Its summertime shipments will head east along Russia's Northern Sea Route, then south through the Bering Strait and into the Pacific. To accomplish this navigational feat, Novatek and Sovcomflot have chartered a $5 billion fleet of custom-built icebreaking LNG carriers, the first vessels of their kind. Yamal LNG's operations require 15 of these ships, and Novatek is actively planning an expansion facility - Arctic LNG-2 - at a site on the other side of the Gulf of Ob.

With a 20 mtpa transshipment hub in Kamchatka, Novatek's costly icebreaking vessels could offload their cargo early and return to Sabetta, shaving at least 2,000 nm off the 10,000 nm round trip. Conventional LNG carriers could pick up the gas and carry it to Asian markets.

Novatek is still selecting the final site, but the $1.5 billion facility may be built Avachinskaya Bay (or Avacha Bay), a protected inlet on Kamchatka's southeastern tip that is home to Petropavlovsk-Kamchatsky, the territory's capital. "Investments are investments, but we come to Kamchatka not just to put a tank," said Novatek board member Alexander Friedman in a statement. "We understand that we will cooperate with the region and assist each other. We are ready."

The terminal will connect to Kamchatka's regional gas supply network, bringing new access to energy for the remote Russian territory. "Thanks to this project, we will increase our energy security," said Governor Vladimir Ilyukhin. "This will ensure the needs of the private sector of the economy."

Original source: https://www.maritime-executive.com/article/novatek-releases-details-of-kamchatka-lng-hub