LNG is shipped out from Russian Arctic seaport of Sabetta. Photo: Novatek

Next door to Murmansk submarine base could come Arctic LNG terminal

Natural gas company Novatek says it plans to build a major reloading terminal for LNG in the heavily militarised area of Ura Guba near Murmansk.
August 21, 2018

A big number of powerful businessmen and government representatives on Monday this week assembled in Sabetta, the new grand seaport in the Yamal Peninsula, for talks on Arctic shipping and the Northern Sea Route.

On top of the agenda was the development of a terminal for reloading of liquified natural gas in the Murmansk region, the regional Yamal Nenets government informs.

In the room were not only Minister of Natural Resources Dmitry Kobylkin and Novatek CEO Leonid Mikhelson, but also Head of nuclear icebreaker company Rosatomflot, Murmansk Governor Marina Kovtun and the deputy heads of the ministries of transportation and industry and trade.

There was also a heavy military presence around the table. Head Commander of the powerful Northern Fleet, Nikolay Yevmenov, played a key role in the project discussions.

Natural gas developer meets Navy

Novatek wants to build a 20 million ton capacity terminal facility in Ura Guba, in the same fjord where the Northern Fleet has a submarine base. According to company CEO Leonid Mikhelson, the terminal is needed for reloading of LNG from ice-class carriers to conventional carriers. The natural gas is produced in the Yamal Peninsula and shipped out from Sabetta. However, ice-class tankers are far more expensive to operate than the conventional ones.

Vidyeavo is a closed military town in the fjord of Ura Guba, Kola Peninsula.

If Mikhelson gets the approval he desires from the Ministry of Defence, he will build a major facility in the Ura Guba, next door to the closed military town of Vidyaevo. Large ice-class tankers will shuttle to the site from Sabetta, and conventional tankers will bring the liquified natural gas further to the markets.

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Vidyaevo is located about 50 km to the northwest of Murmansk. It has a deep and year-round ice-free fjord, and is considered among the most favourable spots for shipping and logistics on the Kola Peninsula. In the mid-2000s, company Gazprom long considered to build a hub for its projected Shtokman field in the area. The local Navy base today houses several nuclear-powered submarines, including Sierra-II and Victor-III vessels.

Westbound and eastbound shipments 

Novatek intends to build a similar natural gas terminal in Kamchatka for eastbound shipments to Asian clients and the meeting in Sabetta came only about a week after another top-level meeting in the Russian far east. In that meeting, Mikhelson presented the projected LNG terminal in the Bechevinskaya Bay to Prime Minister Dmitry Medvedev.

The Kamchatka terminal is estimated to cost 77 billion rubles and is to be ready for operations in year 2022. «The idea is that this site, this hub, will significantly improve the logistics for the strategic objects of the Yamal LNG and the future Arctic LNG 2,» Medvedev said in the meeting.

Norwegian competition

The announced plans for a LNG terminal outside Murmansk is a blow to business interests in nearby Norway, who have been planning to build a similar facility outside the border town of Kirkenes.

Earlier this summer, Norwegian company Norterminal requested permission from the Norwegian Directorate for Civil Protection (DSB) to start up ship-to-ship reloading operations of LNG in partnership with Novatek.

According to the letter Norterminal, obtained by the Barents Observer, Novatek needs the reloading because of a mismatch in production capacity and export capacity. Novatek in August this year launched its second train of the Yamal LNG project more than half a year ahead of its original time schedule and consequently does not yet have the sufficient LNG carriers for out-shipments.

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