By Sabina Zawadzki LONDON, Aug 31 (Reuters) – Liquefied natural gas exports from Novatek’s Yamal terminal in the Arctic have come on stream faster than expected over the summer and exceeded volumes from Russia’s only other LNG facility, Sakhalin, for the first time in August.
The pace of commissioning the multi-billion dollar project has surprised a market used to chronic delays. Additional volumes from the start of another facility should now come in time for the northern hemisphere winter, a time of price spikes.
Novatek said earlier this week it had begun commissioning the third train, or plant, and that its first two trains were running at capacity, which is 11 million tonnes a year (mtpa).
Russian LNG exports amounted to 10.8 mtpa last year, almost all of which came from Gazprom’s Sakhalin-2 site. Full production at the current trains of Yamal and Sakhalin doubles Russian LNG output to just over 20 mtpa, making the country the fifth largest LNG exporter in the world.
Yamal loaded its first cargo at the end of last year. The second train produced LNG late July with normal operations by Aug. 9. Commissioning of the second train took around three months, from when the compressor gas turbines were first fired up, although the commissioning period is not clearly defined.
Barring any technical glitches and should the pace of commissioning continue, the third train should be producing LNG at capacity by November, far ahead of the scheduled first quarter of 2019 and market expectations of mid-next year.
Yamal LNG and Novatek did not respond to queries about the exact timing of the train’s start-up.
In August, Yamal loaded 1.95 million cubic metres (mcm) of LNG, more than double the 818,000 cubic metres it loaded in July, according to Thomson Reuters shipping data. That is also more than the 1.58 mcm loaded by the Sakhalin-2 LNG plant in August, surpassing production there for the first time.
There were already signs that the project was moving ahead with speed when two LNG shipping companies said they would expedite the delivery of Arctic-class LNG carriers to the Yamal project at its request.
Dynagas, an LNG shipping company specialising in carriers able to navigate the icy waters of the Arctic, said on Monday it had delivered the Yenisei River tanker three months early to Yamal on Aug. 14.
Teekay LNG, one of the largest LNG shipping companies, said earlier this month it sought to provide two Arctic-class carriers to Yamal early, noting Yamal’s ahead of schedule ramp-up.
The opening up of the Northern Sea Route through the Arctic during the summer months has raised concerns from environmentalists, but for shipping companies it provides a much cheaper and faster way of transporting goods to and from China.
Novatek estimates the route saves 17 days of shipping from Yamal to China compared to a 36-day round trip through the Mediterranean and Suez Canal and 33 percent in costs per million British thermal unit (mmBtu) shipped.
(Reporting by Sabina Zawadzki; editing by David Evans)
(c) Copyright Thomson Reuters 2018.