BOFIT Viikkokatsaus / BOFIT Weekly 2018/50

The plant is located on the coast of the Arctic Ocean. It brought its first unit, or train, on stream a year ago, and the fourth and final unit is to be commissioned next year. However, the fourth unit is significantly smaller than the first three. Somewhat unusually, the project is about a year ahead of its original schedule.

Russia’s total natural gas liquefaction capacity now exceeds 25 million tons a year, which is equal to about 6 % of global capacity. Liquefaction, shipping and regasification are an alternative way to deliver gas to customers beyond the reach of pipelines. The largest demand is in Asia, which lacks a sufficient number of gas pipelines from production areas.

There are two large liquefaction plants in Russia. The other is on Sakhalin Island on the coast of the Pacific Ocean. From there, gas is shipped directly to Asian markets. In contrast, most of the Yamal gas is shipped towards the Atlantic due to difficult ice conditions. Even though the gas is transported by a fleet of icebreaker cargo ships, shipments towards the Pacific Ocean are possible only in summer. Most often these special ships are used to transport the gas to ice-free waters, where it is then transferred to other vessels. Such transfers are made, for example, in the Norwegian Sea or in Western European ports. The gas then continues its journey with market prices determining the final destination. Some of it goes to Asia.

The Yamal facility is majority-owned by the Russian gas company Novatek. The minority stakes are owned by the French Total, China National Petroleum Corporation and China’s Silk Road Fund. Novatek has been in talks with French, Chinese, Japanese, Korean and Saudi entities about building yet another plant near the Yamal plant. Decisions are due next year. In addition, Novatek has announced its ambition to build yet more large facilities during the next decade.