SABETTA, Russia: President Vladimir Putin on Friday launched a $27 billion liquefied natural gas plant in the Siberian Arctic as Russia hopes to surpass Qatar to become the world’s biggest exporter of the chilled fuel.
“This is a large-scale project for Russia,” Putin said at the official ceremony in the port of Sabetta on the Yamal peninsula beyond the Arctic Circle.
The centerpiece of the event was the loading of the first gas shipment onto an icebreaking tanker from the Yamal LNG plant, with temperatures of minus 28 degrees Celsius outside.
For the project, Russia’s privately owned gas producer Novatek partnered with France’s Total and China’s CNPC.
The tanker that will carry the first shipment was named after Christophe de Margerie, the former Total CEO who died in an accident on the runway of a Moscow airport in 2014.
White whiskers have been painted on it in honor of the late CEO, who was known for his white bushy moustache.
“I congratulate you all on the first loading of the cargo tanker which is named after our friend Christophe de Margerie,” Putin said, praising him as “one of the trailblazers for this project.”
“At the start of the project, people told me not to pursue this. Those who started this project took a risk but achieved a result,” Putin added, thanking the project’s international participants.
“Without their participation, without them trusting their Russian friends, this project would not have got off the ground — this concerns both the financing and the technology.”
The $27 billion project is set to start with a production capacity of 5.5 million tons per year and increase to 16.5 million tons by the start of 2019.
“Without a doubt Russia not only can but will become the largest producer of liquefied natural gas in the world,” Putin said in March.
“We have everything for it.”
Qatar is currently the world’s biggest exporter of liquefied natural gas.
Russia, the world’s biggest gas exporter, derives a huge share of income from pipeline deliveries to Europe.
With Yamal LNG, the country intends to strengthen its market presence in Asia and demonstrate its capacity to exploit huge Arctic reserves despite major technological challenges.
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.
Patrick Pouyanne, Total chairman and CEO, praised the project’s “remarkably low upstream costs.”
“Together we managed to build from scratch a world-class LNG project in extreme conditions to exploit the vast gas resources of the Yamal peninsula,” he was quoted as saying in a company statement.
Despite the project’s completion, Yamal LNG still faces risks, analysts said.
Lussac of Wood Mackenzie said that the coming months will show “whether the plant can operate smoothly in the harsh Arctic environment.”
Transportation through the Northern Sea Route also remains undeveloped, and “its feasibility as a major LNG delivery route is unclear,” he added.
Russia hopes the route will become an easier path to coveted Asian markets, with the LNG project contributing to understanding of how to navigate the Northern Route.
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.
— AFP
Russia looks to overtake Qatar with $27bn LNG project
Russia looks to overtake Qatar with $27bn LNG project
US guarantees for Gulf maritime trade ‘doable’ but could take weeks, experts warn
RIYADH: A pledge by US President Donald Trump to provide insurance and naval escorts for maritime trade in the Gulf has been welcomed, but with concerns over how long it would take to come into force.
In a social media post on March 3, the president said the offer will be available to all shipping lines, and added that “if necessary” the US Navy would escort tankers through the Strait of Hormuz.
The announcement comes as commercial marine insurers and shipping operators reassess risk in and around the Gulf in light of the US-Israel war with Iran.
War-risk premiums have surged, and London’s Joint War Committee has expanded the area it treats as high risk, a move that can increase insurance costs and complicate coverage for voyages in the region.
Joshua Tallis, a senior research scientist at the Center for Naval Analyzes, said it was “unlikely” the US Navy would be able to defend commercial vessels “over the next seven to 10 days,” according to the Financial Times. Escort missions would probably begin only after “the initial phase of major hostilities,” he added, once a larger portion of Iran’s anti-ship capabilities had been degraded.
Mark Montgomery, a retired US Navy rear admiral and former aircraft carrier strike group commander, said such an operation would be “hard but doable,” but warned it could take up to two weeks before conditions were suitable for escorts.
He also said diverting naval assets to convoy protection would likely “cause a reduction in the amount of strike[s] the US could carry out,” the Financial Times reported.
Multiple marine insurers have moved to cancel war-risk cover for vessels operating in Iranian and surrounding Gulf waters, underscoring how difficult it has become for shipowners to obtain protection at any price.
It remains unclear whether the DFC can quickly and credibly fill the gap. The agency’s political risk insurance is typically tied to specific investments and projects and covers threats such as war and terrorism.
Expanding that capacity into broad, transit-linked maritime coverage for “all shipping lines” would be a significant operational and policy stretch, and market participants told Reuters they were skeptical that insurance and escorts alone would be enough to restore flows while fighting continues.
Tobias Maier, CEO of DHL Global Forwarding Middle East and Africa, said some shipping lines have already begun diverting cargo away from the Strait of Hormuz as security risks rise.
“Due to safety concerns, several international carriers have halted their operations in the Strait of Hormuz and are diverting their ships away from the Gulf,” Maier said in comments to Arab News.
He added that the logistics company has activated contingency plans to maintain supply chains in the region, including shifting cargo flows through alternative routes.
“We have activated contingency and mitigation plans, including alternative routing and multimodal solutions — at this stage focusing on Oman and Saudi Arabia as gateways into and out of the GCC,” Maier said, adding that “the safety of our employees and our customers’ cargo as well as maintaining supply chain continuity where possible are of the utmost importance to us.”
Even if implemented, Trump’s measure is more likely to reduce the cost of risk than remove the risk itself.
Analysts and shipping sources cited by Reuters said naval escorts would take time to organize and that US naval resources in the region are not unlimited; insurers and shipowners also have to weigh missile, drone and mine threats that can persist despite convoying.
The net effect, industry participants said, could be a partial easing of war-risk pricing for some voyages, rather than an immediate normalization of traffic through Hormuz.
Energy markets did not appear to stabilize immediately after Trump’s announcement.
Brent crude settled up sharply on March 3, and prices rose again on March 4 as traders focused on the scale of disruptions and ongoing attacks rather than prospective policy support; Brent was reported around the low-to-mid $80s a barrel and WTI in the mid-to-high $70s.
Goldman Sachs, in a March 4 note reported by Reuters, raised its near-term oil-price forecasts and warned that a prolonged disruption of flows through Hormuz could push Brent toward $100 under some scenarios.
The biggest constraint, traders and shipping executives say, is physical movement: if tankers refuse to sail or cannot obtain insurance or safe passage, insurance guarantees alone may not restart volumes.
Insurance withdrawals and cancelations, as well as sharply higher freight rates, have already disrupted ship scheduling and pushed costs to move crude and liquefied natural gas higher, amplifying the inflationary impact of the conflict for importing countries.
Moody’s said the immediate credit impact of the Iran conflict on insurers in the Gulf Cooperation Council region is likely to be limited if disruptions remain short-lived, with its baseline scenario assuming the conflict lasts only weeks and that navigation through the Strait of Hormuz eventually resumes at scale.
Under that scenario, insurers would not face immediate pressure on their credit profiles. The ratings agency said the primary transmission channel would come through insurers’ investment portfolios rather than underwriting losses, as disruptions to oil exports and tourism could weigh on regional asset prices, particularly real estate and equities.
Moody’s estimates that a 20 percent decline in those asset valuations would reduce the total equity of rated insurers by around 7 percent, a hit that most larger companies could absorb due to existing capital buffers. However, risks would rise if the conflict drags on, potentially weakening premium growth, increasing competitive pricing pressure and eroding capital cushions across the sector.
