Russia has now launched a $27 billion liquefied natural gas plant in the snow-covered plains of the Arctic as the country hopes to surpass Qatar to become the world’s biggest exporter of the chilled fuel
Russia vs Qatar
With the Yamal LNG facility, Russia intends to strengthen its market presence in Asia and demonstrate its capacity to exploit huge Arctic reserves despite technological challenges
For the project, Russia’s privately owned gas producer Novatek partnered with France’s Total and China’s CNPC. Qatar is currently the world’s biggest LNG exporter. Russia, the world’s biggest gas exporter, derives a huge share of income from pipeline deliveries to Europe
Eyeing markets in Asia
While Yamal peninsula has huge hydrocarbon reserves, it is an isolated region above the Arctic Circle, about 2,500 kilometres from Moscow and covered by ice for most of the year, with temperatures dipping as low as minus 50 degrees Celsius
Russia hopes the route will become an easier path to coveted Asian markets. The route along the northern coast of Siberia allows ships to cut the journey to Asian ports by 15 days compared with the conventional route through the Suez Canal, according to Total
Sanctions and financial aid
Securing financing for the project was tricky. US sanctions against Novatek made it virtually impossible to borrow from Western banks, and Chinese partners eventually stepped in to resolve the issue. Despite the project’s completion, Yamal LNG still faces risks, according to AFP
LNG production easier in permafrost
Dmitry Monakov, the project’s first deputy director, said that producing LNG in permafrost was easier than in warmer climes, an apparent dig at countries like Qatar. “Nature itself helps us to more effectively liquify gas with the help of such low temperatures,” he told AFP, adding that the plant effectively sat on a gas field so transportation costs were low