Gas will stay afloat

The South Korean shipyard Daewoo Shipping & Marine Engineering (DSME) has completed the construction of a floating storage facility for the NOVATEK transshipment complex in Murmansk. The Saam FSU vessel left the Korean port on February 22, the journey to Murmansk may take several months. A similar storage facility for Kamchatka Koryak FSU, according to Kommersant, will be ready in the second quarter. The use of floating storage facilities will allow NOVATEK to optimize logistics and remove all LNG from its Arctic projects even if there is a delay in receiving new LNG tankers.

NOVATEK’s floating storage unit Saam FSU (floating storage unit), built at the DSME shipyard, left the South Korean port of Okpo on February 22, according to Kpler data. The ship is likely to sail through the Suez Canal to Murmansk, where it will become a key part of the LNG transshipment complex. The storage facility is escorted to Murmansk by tugboats at low speed, the journey may take several months.

NOVATEK intends to launch transshipment terminals in Murmansk and Kamchatka in 2023. They are needed in order to reload LNG from the Yamal LNG and Arctic LNG-2 projects from Arc7 ice-class tankers capable of passing the Northern Sea Route to ordinary conventional vessels, the freight cost of which is lower. The second floating storage facility for Kamchatka Koryak FSU, according to Kommersant’s interlocutors, will be ready in the second quarter of 2023. NOVATEK did not respond to Kommersant’s request.

Now NOVATEK is transshipping LNG in the Belgian Zeebrugge. After the launch of transshipment in Murmansk, the company will no longer depend on European ports. NOVATEK CEO Leonid Mikhelson said in early February that the company also intends to sell LNG directly at transshipment points on FOB (free-on-board) terms. “We hope that the presence of a constant real volume of LNG at these points will lead to price stabilization in the market: both futures and speculative hedging in the LNG market, we hope that they will stabilize,” he said (quoted by Interfax).

The launch of transshipment in Murmansk will allow NOVATEK to start exporting products from the first line of the Arctic LNG-2 plant, which is being completed. It will most likely start operating before the Arc7 ice-class tankers under construction at the Zvezda shipyard are ready. The prospects and speed of building new LNG tankers for Russian projects are now overshadowed by Western sanctions on ship equipment.

As independent expert Alexander Sobko notes, in the case of using a transshipment terminal in the Murmansk region, the transport arm for ice-class gas carriers in the western direction is reduced by almost 2.5 times compared to transshipment at the terminals of Western Europe. This optimization will free up a larger number of ice-class vessels for export along the Northern Sea Route to the east, which is important during the summer navigation period.

The offshore transshipment complexes under construction are designed to ensure the optimization of transportation schemes, primarily for Yamal LNG and Arctic LNG-2, and in the future, when they are expanded, they will be used to service new cargo flows, Mikhail Grigoriev, head of the Gekon consulting center, believes. NOVATEK, as the main shareholder of both LNG production projects and Arkticheskaya Perevalka LLC, which provides transshipment, is able to build a unified shipping management system, including the use of fleets of various projects, he adds.

However, in any case, based on NOVATEK’s forecasts, in 2027 LNG production in Yamal and Gydan will reach the level of 44.2 million tons and will exceed the capacity of offshore transshipment complexes, which will require their expansion. According to Mr. Grigoriev, the construction of additional FSU capacities may take three years from the moment the order is placed.

Tatyana Dyatel