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Sakhalin gets Russia's first LNG
project
By John Helmer
MOSCOW - A
Far Eastern Russian port on remote Sakhalin island is to
be transformed into a modern staging point for a $10
billion project for Russia's first liquefied natural gas
(LNG) plant for exports to Japan and other Asian
markets. It is one of many increasingly 
visible signs of
the coming boom in Sakhalin that could transform the
economics of Japan's long dispute with Russia over
sovereignty in the region and eventually provide partial
relief to the energy-starved Asian region.
Ivan
Chernyakhovsky, spokesman for Sakhalin Energy Investment
Company, told Asia Times Online that the new LNG project
will be built at the previously rundown fishing cove of
Kholmsk. Known as Sakhalin-2 to distinguish it from a
half-dozen other Sakhalin oil and gasfield developments
in the Sea of Okhotsk, it requires the upgrading of all
of the island's infrastructure, especially
transportation.
The island "is in a very poor
state now, even compared to other regions of Russia",
Chernyakovsky said. "The upgrade includes improvement of
the road network, airport and Kholmsk port. The port
must be able to provide reliable transportation services
for the large deliveries of cargoes and labor force for
the Sakhalin-2 project. This will include massive
transportation of pipes for the 1,600 kilometer pipeline
to be built, sea oil platforms, and equipment for the
gas plant."
In June of this year, Chernyakovsky
said, Sakhalin Energy signed a $2 billion contract for
detailed design, supplies for, and construction of the
LNG plant. "The plant is to be built and to start
production by the year 2007," Chernyakovsky said, "as
Sakhalin Energy has already signed contracts signed with
Japanese consumers for delivery of liquid gas starting
in 2007."
The main contract has been awarded to
a consortium made up of Russian companies OAO
Nipigaspererabothka (Nipigas) and the KhimEnergo group,
together with Japan's Chiyoda Corporation and Toyo
Engineering. The plant is to go up on a 490 hectare site
at Prigorodny, on Aniva Bay, in the Korsakov district of
Sakhalin. Chernyakhovsky said the plant will have
production capacity for 9.6 million tonnes of liquefied
gas per year, making it Russia's first, and also one of
the largest LNG producers in the world. Sakhalin Energy
has already confirmed its first two sale deals with
Tokyo Gas and Tokyo Electric for a total of 2.3 million
tonnes per annum of LNG from the plant for periods of
over 20 years.
Sakhalin Energy is 55 percent
owned by the Royal Dutch/Shell Group, one of the
developers and operators of the Sakhalin-2 gasfield,
along with Mitsui and Mitsubishi of Japan. Shell is
paying $56 million to Sakhalin Energy to fund the two
port contract awards.
The production and shipping
plan call for the installation of a second production
platform on the Piltun-Astokhskoye field, and a new
platform on the Lunskoye field, both offshore in the Sea
of Okhotsk; together with the onshore processing plant,
an oil and gas pipeline system, and an oil export
terminal.
While loading of LNG is planned to be
made from a special mooring built into Aniva Bay,
Kholmsk port nearby is to be expanded to service the
project. Officials of Sakhalin Energy said last week
that they had chosen a local contractor, Sakhalin Shelf
Service (SSS), to build the modern port facilities over
the next 30 months. The contract is worth about $40
million.
SSS is already managing shore supply
depots at Kholmsk and Korsakov, another of the island's
small ports. Dredging and some quayside works have
already been completed at Kholmsk. A second $16 million
contract has been awarded SSS to provide the labor to
perform vessel berthing and unloading, materials
movement within the port, equipment storage, rail car
preparation and rail and truck loading and dispatching.
The Russian workforce expected for these contracts will
be about 280.
(Copyright 2003 Asia Times Online
Ltd. All rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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