It is impossible to expedite the LNG equipment production without a helping hand of the government - Leonid Mikhelson

Of the initially announced RUB23 billion rubles the Ministry of Finance allocated only 2.8 billion

It is impossible to accelerate the production of LNG equipment without state support. This opinion was expressed by Leonid Mikhelson, Chairman of the Management Board, Member of the Board of Directors of NOVATEK, speaking at the session “Substitution of Foreign Technologies and Equipment in the Framework of Industrial Support for Russian LNG Projects” of SPIEF.

“Even at the stage of creating the Yamal LNG project, we spoke about the importance of launching a special program for Russian enterprises that would help start local production LNG equipment. The foreign industry has been formed for decades. We consider it impossible to expedite the production of equipment of such high complexity without state support,” PortNews IAA correspondent quoted Leonid Mikhelson as saying. He reminded that in 2017 President Vladimir Putin gave instructions, and a year later the government approved a road map for the local manufacturing content of LNG equipment. In 2020 the government adopted a long-term program for the development of LNG production, in which the list of necessary equipment was fixed. In 2021, the Breakthrough in the LNG Market program developed by the Ministry of Industry was adopted.

“But all these documents were not supported by funding. Of the initially announced 23 billion rubles, the Ministry of Finance earmarked only 2.8 billion. RUB1.3 billion were allocated to Rosatom, which, using its own funds, has built a unique test bed that allows testing pumps and expanders for LNG. The remaining RUB1.5 billion assigned by the Ministry of Industry for R&D for seven items of equipment out of the required minimum of 18 items. According to our calculations, the allocated amount compensates for about 36% of the costs of manufacturers for this R&D,” said Leonid Mikhelson.

Speaking about Russia's position in the global LNG market, Leonid Mikhelson noted that Russia plays a crucial role in the global energy balance, although today efforts are being made to limit our opportunities in foreign markets. In terms of gas exports volume, we remain in first place, the share of this fuel in the world's energy consumption is growing steadily. Now it is 23%, and by 2030 it is expected to hit 25%. Growth will be driven by LNG. Over the past five years, the contribution of LNG to the total increase in gas trade amounted to about 80%. Actual LNG market volumes already exceed inter-regional pipeline deliveries.

“The current position of Russia in the European gas network market only confirms that the LNG industry needs to be developed rapidly - this is one of the most promising segments of the global energy sector. But it is necessary to fundamentally accelerate the development of the relevant industry sector,” said the NOVATEK Chairman Leonid Mikhelson.