Russia’s Gazprom sets LNG production as the top priority

Russian natural gas supplier Gazprom has decided to set its liquefied natural gas (LNG) production as one of its top priorities.

Gazprom’s board of directors expressed its approval of the company’s ongoing projects for the production and supply of LNG.

The company noted that the creation of new capacities generates additional possibilities in terms of diversifying its sales markets and increasing the flexibility of gas supplies to Russian consumers.

A large-scale LNG production is currently in operation in eastern Russia within the Sakhalin II project. Recently, Japanese shipping company Mitsui O.S.K. Lines (MOL) signed a charter contract with Sakhalin Energy LLC, a new operator of the Sakhalin II plant, for the LNG carrier Grand Mereya.

Earlier this year, oil and gas giant Shell announced its plans to exit its 27.5% stake in the Sakhalin II LNG project, writing off an investment with a book value of $1.6 billion.

Following these events, Japanese general trading company Mitsui & Co., which holds a 12.5% stake in the project said that the Russian project has enough technical expertise to operate even without departed shareholder Shell.

Reacting to the imposition of Western sanctions on Moscow, Russian President Vladimir Putin ordered the project be transferred from its Bermuda-based operator to a domestic company and told foreign shareholders they would have to re-apply to maintain their stake in the new entity.

In August, the Kremlin approved applications from the two Japanese trading houses Mitsui and Mitsubishi Corp. to transfer their stakes to the new operator.

According to Interfax news agency, Russian Deputy Prime Minister Alexander Novak said last month that a new shareholder in Sakhalin II will be named by the end of the year to replace Shell.

In the northwestern part of Russia, Gazprom launched the mid-scale complex for LNG production, storage and shipment near the Portovaya CS in September 2022. The presence of such production capacities on the coast of the Baltic Sea is said to have considerably strengthened the energy security of the Kaliningrad Region.

In the Leningrad Region, the company is implementing a project for the construction of a large-scale LNG production plant as part of the complex for processing ethane-containing gas.

Meanwhile, Russia’s first LNG bunkering vessel, Dmitry Mendeleev, which was custom-built for Gazprom Neft, started refuelling ships with LNG in September 2022.