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Construction on Yamal LNG to begin in 2012

LNG Industry,

Novatek are expecting to start building the first train of the Yamal LNG liquefaction plant in 2012 and have it completed by 2016, a second train will be started in 2013 and should be complete by 2017, while a third train is also planned for 2014 to be completed by 2018.

Russia’s Deputy Finance Minister, Sergei Shatalov, stated on Monday that the Russian Finance Ministry supports Yamal LNG being exempted from Mineral Extraction Tax, he also said it was likely that the project would be exempt from the tax until the deposits started working with a 16 - 17% margin.

The South Tambey field in the Yamal peninsula is expected to be able to produce up to 16 million tpy of natural gas for export. Novatek is looking to ship LNG via the Northern Arctic route, which would effectively cut 4000 nautical miles off the usual trip to the Asia-Pacific region via the Suez canal. This route has only become possible because of a decrease in sea ice, which means the route can be plied for three to four months of the year.

Russia plans to produce 1 billion m3/ yr of LNG by 2030 and the Yamal LNG project is integral to this plan, which has suffered setbacks due to the economic shocks of the last two years which have impacted on LNG demand, leading to delays in starting construction of LNG plants.

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