LNG

Developing the LNG business is one of the key priorities of Gazprom Group operations, aimed at increasing export volumes of natural gas by entering new markets inaccessible to pipeline supplies. For over a decade now, Gazprom Group has been actively ramping up volumes of its LNG trading portfolio — both through the implementation of own projects as well as through LNG purchases from third parties. Gazprom Group’s competitiveness in LNG trading is supported by its extensive trading portfolio, availability of own LNG fleet, and its wide experience in trading operations on the LNG market.

The operator of the Group’s trading portfolio is Gazprom Marketing & Trading company. Taking a portfolio approach to LNG trade operations makes it possible to react quickly to changing market conditions, ensure the geographical diversification of supplies, and optimize transportation costs.

At present, the basis of Gazprom Group’s LNG trading portfolio consists of LNG supplies from Russia’s only current project for liquefied natural gas — the Sakhalin-2 project. Additionally, LNG is also purchased from third parties under fixed-term agreements and spot deals. In 2005–2016, Gazprom Marketing & Trading delivered over 300 LNG shipments to the markets of 14 countries, including more than 120 cargoes originated from the Sakhalin-2 project. In 2016, Gazprom Group sold 55 LNG shipments at a total volume of 3.7 mln t.

The construction of a second gas liquefaction plant is planned. The Baltic LNG project envisages the construction of the LNG plant with an annual capacity of 10 mln t in the port of Ust-Luga, Leningrad Region. The potential target markets for the project include countries in the Atlantic region, Middle East, and South Asia, as well as small-scale LNG markets in the areas of the Baltic and North Seas. The possibility of LNG swap deals is also under consideration.

In June 2016, Gazprom and Shell signed the Memorandum of Understanding on the Baltic LNG project. A year later, on June 3, 2017, the Heads of Agreement was signed to set up a joint venture which will secure financing for and carry out the design, construction and operation of the Baltic LNG plant in the Leningrad Region. The parties also signed the Joint Study Framework Agreement on the Baltic LNG project, which will allow the companies to start developing preliminary project documentation as soon as possible.

The implementation of Gazprom Group’s new LNG projects, including the third production train of the Sakhalin-2 plant and the Baltic LNG project, will allow for further growth in Gazprom Group’s supply portfolio, facilitating the geographical expansion of supplies and entrance to new promising regional markets.

Small-scale LNG (ssLNG) exports

In 2016, export sales of ssLNG amounted to roughly 22,000 t.

Work is continuing on expanding Gazprom Export’s presence in Europe’s ssLNG markets, as well as diversifying ssLNG deliveries by road transport, as well as through other logistics options.Gazprom Export is actively working on bringing to market volumes originating from existing low-tonnage natural-gas liquification facilities and those currently under construction (facilities in Kaliningrad, Kingisepp, Pskov, Peterhof and Port Vysotsky, as well as under the Portovaya CS project).

A commission contract was concluded in 2016 with Gazprom Transgaz Yekaterinburg LLC, and another contract was signed for commodity supplies to the Republic of Kazakhstan. First regasification unit for LNG supplies under this contract was commissioned in Astana in February 2017.

Within the framework of the commission contract with Gazprom Transgaz Yekaterinburg LLC, Gazprom export began delivering LNG to the Republic of Kazakhstan by road transport. First regasification unit for ssLNG supplies under this contract was commissioned in Astana in February 2017.Negotiations are also underway with foreign companies on possible cooperation in the joint implementation of small-scale LNG infrastructure projects . These projects include the construction of LNG receiving terminals, LNG filling stations and other facilities, including a pilot project for the creation of a small-scale LNG receiving terminal in the Port City of Rostock,Germany.

Framework agreement on cooperation in the European ssLNG market was reached between Gazprom and Fluxys in March, 2016. Its implementation along with the pilot project for construction of ssLNG-receiving terminal in Rostock was discussed between Gazprom and Gasunie in June, 2016.

In 2016, Gazprom and Japan-based “Mitsui & Co.” signed a Memorandum of understanding, which set the intentions for joint feasibility and marketing analysis of bunkering of liquefied natural gas-fueled marine vessels. Joint works in the field of bunkering will allow developing cooperation in the segment of ssLNG. Also, an Agreement of Strategic Cooperation was signed, which envisages collaboration in various areas, including LNG bunkering of marine vessels. A year later, on September 7, 2017, the parties signed the Framework Agreement for cooperation on small- and mid-scale LNG.

On June 2, 2017, Gazprom and OMV signed a Framework Agreement to collaborate in the small-scale LNG sector, aimed at implementing a joint integrated construction project for a small-scale LNG terminal in the area of the Russian coast of the Black Sea.