Ust-Luga: gas attack
Two gas terminals are launched at Ust-Luga port – a complex for processing of stable gas condensate with an export terminal (Novatek) and a terminal for transshipment of LPG and light oil products (Sibur). Both of them will open new market channels for Russian suppliers. Besides, they are unique for the national port industry and their owners count on changes in export regulations.
Ust-Luga to process and load
The specific feature of Novatek terminal, the first phase of which was officially launched on June 19, 2013, is the shipment of products processed right there at the port. The location of the processing facilities close to the berths is quite a novelty for Russian port industry though it is an ordinary practice for the leading European port.
Stable gas condensate comes to Ust-Luga from Purovsky gas condensate processing plant located in close proximity to the East-Tarkosalinskoye field in the Yamal-Nenets Autonomous District. It is then processed in the port into light and heavy naphtha (about 70% of all products received from the condensate), jet fuel (some 13%), ship fuel or LPG. All products, except for LPG, are supposed to be further exported via the marine complex while LPG is either used for in-house needs of the enterprise or can be sold to the regional consumers. If necessary, condensate can be exported as well.
The project is to be implemented in two phases – the first one was launched on June 19, 2013, the other one is to be completed by the end of 2013. As Head of Novatek complex Leonid Mikhelson, told journalists during the ceremonial launch of the first phase, the complex is to reach its full capacity of 6 mln t per year by late 2014 – early 2015. Besides, the project also has a capacity reserve of 15%. The complex is designed with a consideration of increased production of SGC at Purovsky Plant (from 5 to 11 mln t per year). The investment into the first phase totaled some RUB 20 bln with additional RUB 2-3 bln to be reportedly invested into the development.
Up to the present, the condensate produced by the plant was exported via port Vitino (Kandalaksha Bay of the White Sea). As Leonid Mikhelson commented, with the launch of Ust-Luga terminal Novatek will not cease using Vitino considering the growing capacity of Purovsky Plant. According to him, the port in Kandalaksha Bay is especially reasonable for export shipments in summer time along the Northern Sea Route.
For Novatek, Ust-Luga terminal is a breakthrough in export logistics – first of all, the company now has its own terminal not affected by ups and downs of third parties (like a corporate conflict at Vitino), secondly, Ust-Luga geographical location provides for new sales opportunities. The first batch of naphta shipped from Ust-Luga was bought by the Brazilian petrochemical company Braskem. The opening ceremony was also attended by the Korean business representatives, evidently interested in purchasing Novatek products via Ust-Luga.
To liquefy in a modern way
There is also something special about Sibur terminal, which, according to the company representative, is at the same phase of readiness as Novatek complex. The specific feature of Sibur project in Ust-Luga is the following: it is to be the first sea terminal in Russia to apply isothermal technology for storing LPG. As compared with the pressurized LPG, cooled LPG occupies 8 times less space allowing for shipment of larger volumes.
However, the first phase only provides for transshipment of pressurized LPG. The third gas carrier was loaded in Ust-Luga on June 19, simultaneously with the launch of the first phase of Novatek terminal. It is to deliver 11,000 m3 of LPG to France.
Sibur project is to be implemented in four phases. The first one, which has actually been launched, implied the construction of a terminal for shipment of pressurized LPG and the creation of general infrastructure. The second phase provides for creation of light oil product transshipment facilities, the third one – isothermal storage facilities and the forth one - facilities for LPG shipment in tank trucks for regional needs. The terminal is supposed to be completed by the end of 2013. It will comprise 3 tank farms and 2 tank car loading racks. The terminal will be capable of simultaneously storing 40,000 cubic metres of LPG in isothermal tanks and 10,000 cubic metres in pressurised tanks. Light oil transhipment facilities will have a storage capacity of 100,000 cubic metres. The complex is to occupy the territory of 138 hectares with the total length of its process rack making 3,028 metres.
The terminal will have 2 berths (160-metre long and 185-metre long) with the natural depth near berths of 13.5 m. The larger berth will allow handling of refrigerated and semi-refrigerated gas carriers with the cargo capacity of 20,000 cubic metres (21,000 tonnes in deadweight) for transportation of cooled butane or propane, 30,000-tonnes refrigerated gas carriers (41,000 tonnes in deadweight) for transportation of cooled propane as well as product carriers with deadweight of up to 48,000 tonnes. The first berth can handle smaller gas carriers.
The terminal’s total capacity is 4 mln t per year including 1.5 mln t of LPG and 2.5 mln t of light oil products. The investments into the project make some RUB 25 bln.
The launch of the terminal leads Sibur to new markets of the North and North-West Europe as earlier Russia had sea terminals for LPG transshipment only in the South Basin. In particular, large LPG terminal of Tamanneftegaz was launched at the port of Taman on August 23, 2012. LPG is also transshipped via Maktren-Nafta terminal in the port of Temryuk.
What is the rate about
According to Sibur, the growth rates of LPG consumption is 4% per year in both Russia, Europe and other regions. The majority of LPG produced in Russia is exported with annual volumes making 3.8 mln t while only 2.9 mln t is processed and 3.7 mln t is consumed by public utilities. Russian LPG export is forecasted to increase to 5.5 mln t by 2015. Just over a half of LPG is exported from Russia by Sibur (total share of Russian exporters at the European market makes 12%).
The forecasts promise the growth of naphta export as well. With naphta and gasolines proficit inside Russia, which is to grow in the long-term vision, naphta export is to grow up to 9-10 mln t per year for the European market (excluding South Europe). Today, naphta consumption in Europe makes 48.8 mln t with 22% of the market occupied by Russian suppliers.
As Leonid Mikhelson told journalists, the demand for liquefied gas is growing faster than for conventional gas which motivates investments into the creation of processing and exporting facilities.
Meanwhile, despite the optimistic forecasts concerning the demand growth, both companies – Novatek and Sibur – insist on revision of protective export duties for naphta. “Straight-run gasoline is produced from associated gas and we are not engaged in petroleum processing,” Dmitry Konov, Chairman of Sibur Board, explained his position. He was also supported by Leonid Mikhelson who emphasized the dependence of projects’ cost recovery on the export duty issue. According to him, the consultations with the Russian Ministry of Energy will in the nearest future result in a solution. The protective duty for export of straight-run gasoline was introduced in 2011 as a response to gasoline deficit in Russia.
Vitaly Chernov
IAA PortNews provides photo report on opening of the terminals >>>>