Valentin Narezhny, General Director of Vostok LPG, tells about the publically debated project

 Over a four-year period, the cost of an LPG terminal in Primorsky Territory has went up to RUB 6 billion due to involvement of more advanced technologies. In his interview with IAA PortNews, Valentin Narezhny, General Director of Vostok LPG, tells about this and other specifics of the project.

The project on construction of an LPG terminal in the Perevoznaya bay of the Primorsky Territory has seen some technical and financial amendments over the four years but is still being criticized by environmental experts and the public. Meanwhile, the company management says investors from the Republic of Korea have expressed their readiness to participate in the project and the construction is to commence in the nearest months. Valentin Narezhny, General Director of Vostok LPG who took the office three months ago, answers the questions of IAA PortNews.

- Tell about the project, please. Who established Vostok LPG, LLC? Some say it was an entrepreneur from Kazakhstan whose interests are far from local interests and specifics.

- The company was incorporated by private national investors. It is important that the company is registered in Khasan District of the Primorsky Territory, where the terminal is located. Thus, the taxes will be paid into the local and regional budgets.  

- What are foreign investors involved in the project?

- Our partners are large Korean companies: Hyundai, Halla and E-1. We are currently at the phase of signing investment agreements.

- What LPG suppliers are foreseen by the project?

- We have come to a cooperation agreement with several Russian suppliers.

- Where will the cargo go?

- It will mostly go to the APR countries.

- What is the basis of the forecasts for development of LPG supplies to the APR markets?

- The project on construction of an LPG terminal is being implemented in the framework of international agreements on the development of commercial and economic relations between Russia and APR countries. In our opinion, the segment of LPG will put competitive pressure on other types of fuel in the region and the demand for it will grow. First of all, it is China. Therefore, we see our project as the beginning for an LPG cluster in the Far East.

“The segment of LPG will put competitive pressure on other types of fuel in the region and the demand for it will grow”

- The company announced the beginning of construction back in 2016. Why was it postponed? How have the project parameters changed over that time? What is the current project deadline?

- I would rather not comment on the actions of the previous company management. The key technical parameters have not changed. We are set to build a sea terminal for LPG handling in the Perevoznaya bay of the Primorsky Territory. The project foresees the reconstruction of a railway station, construction of gas storage facilities and two offshore mooring points three kilometers off the shore. The terminal is designed to handle 20,000-25,000 dwt ships calling 1-2 times per week with annual handling of 1 million tonnes of LPG. However, over the four-year period, the project cost has increased by a third,  to RUB 6 billion. It should be primarily attributed to equipment of the terminal with more advanced facilities than it was planned before.

Upon completion of the public hearing on November 7 and signing of its minutes by the Khasan District Administration, the project will be forwarded to undergo the state environmental expertize. The construction beginning is scheduled for the late 2020 – early 2021. The project will have one phase with the implementation period estimated at 2.5 years. The terminal is to become fully operational throughout a year.

“The terminal is designed to handle 20,000-25,000 dwt ships calling 1-2 times per week”

- What is the project designer? Is it experienced in designing of marine terminals?

- It is Cherepovets based Promproekt LLC. Yes, they have been involved in designing of similar facilities.

- Is it is known, the railway in the Khasan District has a limited capacity. Have your planned cargo volumes been approved by Russian Railways?

- Yes, they have.

- Who will build the terminal and supply the equipment?

- The general contractor has not been selected yet. As for equipment supplies, there are preliminary agreements on ordering the production next year. Those are Russian companies.

- Where and how are you going to get skilled workforce?

- Indeed, that is a challenge and we are facing it. For example, we are going to implement a programme of special training together with a local school. We are set to invest substantial resources in to the school improvements.

- Last year, public hearing on the project was cancelled. Public hearing on the environment impact assessment held last Friday provoked strong criticism from the side of experts in the part of the documents quality. Who prepared the report on the project’s environmental impact? How come such a problem turned up after a four-year period?

- The documents submitted for the discussion had been prepared under applicable laws with various state institutions and companies involved as experts. For example, data provided by TINRO had been used to assess the environmental impact. If its conclusions are different from the opinion of FEB RAS experts it does not mean we ignore or violate the laws. It is the state environmental expertise that is to make the final conclusion. We are open for a dialogue with the scientific and environmental community.

- Experts says there is a threat to the sea life and The Land of the Leopard National Park.

- LPG is not as hazardous and toxic as other types of raw materials. We have foreseen additional investments in technological equipment to prevent gas leakage during the terminal’s operational process. Besides, for safety reasons we will have not electrical but pneumatic system of emergency protection. Moreover, offshore mooring points with connection pipelines ensure minimization of the impact on the water area taking into account the low frequency of calls. We continue our dialogue with environmental organisations and, what is essential, stay in close contact with the management of The Land of the Leopard National Park.

“LPG is not as hazardous and toxic as other types of raw materials”

- As we know, most of locals are against the terminal. How are you going to change their mind?

- The Primorsky settlement residents are for the terminal while so called ‘expert’ communities are against it. As of today, those ‘expert’ communities comprise people who didn’t bother to take a look at the documentation available at the website of Vostok LPG. We cannot take into consideration questionable statements like those comparing the terminal with Fukushima, while real expert opinions like those of the National Park’s scientists or Vladimir Rakov, Senior Research Fellow of TOI, FEB RAS will be taken into account during the design phase.

- Is there an alternative location for the terminal?

- So far, nobody has succeeded in persuading us it is necessary. We believe our position is sufficiently reasoned.

Interviewed by Yevgeny Pankratyev