State Duma of Russia approved in first reading expansion of resource base for LNG production projects

On 31 March 2020, State Duma of the Russian Federation approved in the first reading the draft Federal Law (No 895044-7) On introduction of amendments into Article 3 of the Federal Law on Gas Exports in the part of expansion of the resource base for export projects involving production of liquefied natural gas, says press center of Russian Gas Association (RGA).

The document has been drafted by the Ministry of Energy in pursuance of the President’s and the Government’s orders aimed at creation of conditions for exports from promising LNG projects.

According to the statement, the analysts forecast almost a two-fold increase of LNG sales in the coming 15 -20 years – from 350 to 570-700 million tonnes.  Therefore, Russia should build up LNG production and exports from the current 30 million tonnes to 140 million tonnes which meets the resource base capacity.

When speaking at the plenary session of State Duma, Pavel Zavalny, Chirman of the Energy Committee responsible for the bill, said that monetization of that resource base including Arctic resources of the Yamal and Gydan peninsulas is reasonable only through production and export of LNG.  
 
According to Article 3 of the Federal Law, exclusive right for LNG exports is given to owners of mineral licenses to deposits of federal significance (obtained before 1 January 2013). It also foresees the construction of LNG plants or gas delivery to such plants.

The draft law foresees expansion of the right for LNG exports to two new categories – those already provided with an exclusive right for LNG exports and expanding their resource base for building up the production capacity and companies affiliated with holders of LNG export licence.

According to Pavel Zavalny, legally expanded resource base for LNG exports will let embark on Arctic LNG 2 and Ob LNG projects as well as development of other gas fields in Russia’s Arctic region.

“Not only will that boost production and export of LNG, that will also facilitate the construction of LNG transshipment terminals in Kamchatka and in the Murmansk Region as well as gasification of those regions and Arctic territories. That will also let develop bunkering of seagoing LNG carriers, which is crucial for a vulnerable environment in the area of the Northern Sea Route.  LNG can account for up to 55% of NSR traffic growth to 80 million tonnes by 2024”, he said.

Pavel Zavalny also expects Russian equipment and technologies make 80% of new LNG projects in the Arctic which means the development of a new technological niche. According to him, implementation of those projects will also generate about 90,000 jobs and ensure loading of 800 Russian companies for a decade with additional taxes to feed the federal and regional budgets.