Russia's Gazprom begins construction of major Ust-Luga gas complex

Russia's Gazprom on May 21 began construction of a major new gas, LNG and chemicals complex at Ust-Luga in northwestern Russia that will include the 13 million mt/year Baltic LNG plant.

The start of work at the complex -- which will have a total processing capacity of 45 Bcm/year -- was marked by a high-level ceremony attended by Russian Deputy Prime Minister Alexander Novak and Gazprom CEO Alexei Miller.

The complex will also include a gas complex for processing ethane-rich gas, with some 3 million mt/year of polymer production capacity envisaged, and will also send some 18 Bcm/year of processed gas directly into the Russian network.

"Today, in the Leningrad region, we have started to build a new high-tech industrial cluster, which is extremely important for the region and the whole country," Miller said in a statement.

Gas for the complex will originally be provided from existing fields in Russia's Nadym-Pur-Taz region, but in the future the complex will also take gas from the major Tambey field on the Yamal Peninsula.

Tambey is estimated to hold a huge 5.2 trillion cu m of gas as well as 380 million mt of oil and condensate, making it the biggest field in terms of reserves on the Yamal Peninsula.

It is expected to start producing gas in 2026, Gazprom said.

Gazprom considers the peninsula -- already home to the 4.9 Tcm supergiant producing Bovanenkovo field and the 2 Tcm Kharasavey field -- as a strategic region for maintaining or increasing gas output in Russia.

Gazprom is developing the Ust-Luga site together with its project partner RusGazDobycha.

"The creation of a gas-chemical complex is a unique project for Russia, providing production of high-margin products," RusGazDobycha CEO Konstantin Makhov said.

Baltic LNG

The two-train LNG export facility at Ust-Luga will be Gazprom's second LNG export plant in addition to its near 11 million mt/year capacity Sakhalin LNG project in Russia's Far East.

Speaking at a press conference May 20, Gazprom Export chief Elena Burmistrova said Gazprom could use Baltic LNG as a tool for optimizing its European gas sales and would not compete with its pipeline deliveries.

Burmistrova said talks were ongoing with RusGazDobycha about the details of the sales strategy for LNG from the facility.

"We consider [Baltic LNG] to be an optimizing component of our portfolio, not an internally competing element," she said.

Baltic LNG -- whose first train is slated to come online at the end of 2023 and the second at end-2024 -- is well located to supply European markets.

Another LNG project under development is a third train at the near 11 million mt/year capacity Gazprom-led Sakhalin LNG facility in Russia's Far East.

Gazprom and its partners have said previously they were planning a 5.4 million mt/year train 3 at the project, but the development has been on hold due to issues securing feedstock for the train.

"The third train is at a high degree of readiness," Gazprom head of department, Dmitry Handoga, said at the press conference May 20.

"We have drafted project design documents with our partners and we have prepared a set of documents for construction contracts," Handoga said. "But the resource base matter is still pending."

It had been hoped to source gas for the third train from the ExxonMobil-led Sakhalin 1 project, through the development of new fields in Russia's Far East, or through a combination of the two.