Russia: Sovcomflot, NOVATEK and VEB to Cooperate in Yamal LNG Project

At the Saint-Petersburg International Economic Forum, Sovcomflot – Russia’s largest shipping company, OAO Novatek – the leading independent natural gas producer, and the state corporation “Bank for Development and Foreign Economic Affairs” (Vnesheconombank) signed a memorandum on cooperation as part of the Yamal LNG project, providing for the construction of two gas-carriers for the Yamal LNG project.

According to the document, Vnesheconombank is to look into the possibility of financing the construction of two ‘pilot’ liquefied natural gas carriers for the Yamal LNG project. Sovcomflot has confirmed its interest in operating the new vessels as a bareboat charterer and technical manager.

The LNG carriers are due to be built at one of the world’s leading shipyards, following a tender process. The agreement provides for the participation of Russian shipbuilders in the project, including the transfer of LNG tanker construction technology to Russia, as well as the organisation of training for Russian specialists at overseas shipyards and subsequent technical support in establishing gas carrier production in Russia.

Sovcomflot specialists will participate in the final approval of optimal technical, commercial and operational solutions.

The design of the 170,000m³ capacity gas carriers has been specially developed for the LNG Yamal project and is unique in its technical characteristics. A high ice class (Arc7) means the new vessels are well suited to the challenging climatic conditions of the Arctic. To ensure uninterrupted operations, the gas carriers will be fitted with a diesel-electric propulsion system that includes three Azipods, each with an output of 15MW. At present, there are no other gas carriers in the world with an equivalent overall propulsion power.

Final delivery of the new vessels is due to take place in 2016. The agreement is a logical continuation of documents signed by Sovcomflot and VEB in 2011 as part of the Saint-Petersburg International Economic Forum. At that time, the companies signed a bilateral cooperation agreement providing for the development of joint proposals on the construction, acquisition and subsequent operation of a fleet for the Yamal LNG project. The implementation of this project has been approved and provided for by a comprehensive Russian government plan to develop liquefied natural gas production on the Yamal Peninsula.

 Sergey Frank, President of OAO Sovcomflot, said:

“Providing LNG shipping in the challenging climatic conditions of the Arctic requires the mobilisation of significant resources – including advanced shipbuilding technologies and many years experience and expertise of captains and crews working on modern gas-carriers. At Sovcomflot we are confident that our long-standing experience of Arctic shipping and successfully implemented Arctic projects, for example Varandey and the Northern Sea route transit crossings, will ensure we cope successfully with the task of providing uninterrupted LNG transportation, in the challenging climatic conditions of the Yamal Peninsula.”

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SCF Group, June 21, 2013