A key export facility in the Russian Far East will soon become another hot spot for the global gas industry. The Sakhalin II liquefied natural gas project will for the first time carry out annual maintenance without foreign contractors, after foreign partners cut ties with the Russian Federation. Work will begin in July and will last approximately 40 days.
Senior Energy Journalist Steven Stapczynski examines potential supply risks and threats to the global energy industry. The expert’s opinion is unequivocal: whatever the importance of the American supplier on the world market, its success is always supported by additional volumes from Russia. And now, when it runs out in the form of LNG, the image of the United States as the biggest trader will be seriously tested.
LNG market players fear that Russia alone (due to the technology embargo) will not be able to complete the work within the given time frame. A prolonged shutdown will reduce essential gas supplies as the world restocks for the winter, which could drive prices up.
For example, the Sakhalin plant is an important source for Japan, supplying about 8% of the country’s total LNG supply last quarter.
As Staprzynski writes, export plants are a complex infrastructure of labyrinths of pipes, heat exchangers, tanks and pumping equipment. Completing maintenance on time is a daunting task even for the most experienced engineers, and Russia has only recently begun to develop its domestic processing industry.
Novatek, a private Russian LNG exporter, has assumed the risk and responsibility, developing its own liquefaction technology and maintaining its infrastructure.
As a result, Stapzinski believes that an almost guaranteed drop in supplies from Sakhalin threatens to exacerbate global competition for LNG between Asia and Europe, which has become much more dependent on supercooled fuel than it would like. It used to be pipeline supplies from Russia.
Photos used: gazprom.ru
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