Gazprom Gets State Funds for Baltic LNG Venture
Russia's state development bank VEB has agreed to provide a rubles 55bn ($740mn) loan for a gas processing and LNG production complex Gazprom plans to build at the Baltic port of Ust-Luga, it said on August 24.
The funds will be used to cover the cost of project documentation, making advance payments and other associated costs, VEB said.
Gazprom unveiled the joint project with Russian partner Rusgazdobycha last year, initially placing its cost at over rubles 700bn ($9.4bn). Due online in 2023-2024, the complex will process up to 45bn m3/yr of raw gas and produce 18bn m3 of treated gas for pipeline export and 13mn mt/yr of LNG. Ust-Luga is the starting point of the Nord Stream 2 pipeline.
Gazprom agreed with Rusgazdobycha on gas supplies for the facility in June. The partners have picked a contractor to build the complex's gas processing facilities, local firm Nipigaz, but have not yet selected one for liquefaction units.
The complex will also manufacture 3.6mn mt of ethane and 2.2mn mt of liquid petroleum gas annually. The ethane will be delivered to a petrochemical project in Ust-Luga that Rusgazdobycha is developing on its own. VEB has also pledged a loan of up to 111bn for this venture, which will produce 3mn mt/yr of polyethylene at peak capacity.
Gazprom had earlier planned to develop Baltic LNG production with Shell. But the major withdrew from the project last year after Gazprom added processing facilities to its scope: it wanted just an LNG plant. Gazprom brought in as partner Rusgazdobycha, one of whose founders, Arkady Rotenberg, is a close ally of Russian president Vladimir Putin. Rotenberg has been blacklisted under the US sanctions regime.