Russia sails towards global LNG dominance after start-up of Arctic project

Russia has started production at a US$27 billion LNG plant located in the remote Obe River and will export its first cargo from the Arctic port of Sabetta by the end of the week.

The Yamal LNG project is operated by Russia’s second largest gas producer Novatek, which holds a majority 50.1% stake, as well as France’s Total and two Chinese firms, National Petroleum Corp and Silk Road Fund.

Novatek said the first train will deliver 5.5 million tonnes (Mt) of fuel annually to European and Asian markets. The project’s overall capacity should reach 17.5Mt with the last train starting operation by the end of 2019.

The project will utilise specially built ice-breaking tankers to navigate treacherous Arctic waters. These tankers are expected to halve the time needed to ship gas to China, which has led global gas demand for the last two decades.

President Vladimir Putin has previously stated that navigating the Northern Sea route to China would allow Russia to become the world’s largest LNG producer.

“Russia, without any doubt, not only can, but will become the largest producer of LNG in the world,” he told Yamal LNG bosses earlier this year.

Although Russia has just one existing operational facility in its remote arctic regions, Yamal LNG is considered a key milestone in Putin’s strategy to grow Russia’s influence in global energy markets.