Yakutia LNG, a 17.7 million metric ton/year (mmty) liquefaction project proposed for the Russian republic of Yakutia, is planned to start up in 2027 to deliver liquefied natural gas (LNG) from Russia’s Far Eastern coast to China. 

If the Russian government gives permission for the Yakutia project to export LNG, it could help Russia towards reaching its ambitious LNG production target of 140 mmty by 2035, set by the government in 2021. It would also help buttress Russia’s growing role as a natural gas supplier to China, which has become the world’s leading LNG importer.

The relationship has expanded at a time when Europe’s dependency on Russian supplies has come under a microscope as war has broken out in Ukraine.

Russia’s annual LNG production capacity is currently about 28 mmty, although production surpassed 30 mmty in 2020 and 2021, according to data and analytics firm Kpler. 

Along with Australia and the United States, Russia has driven global LNG supply additions in recent years. In 2020, Russia was the fourth largest global LNG exporter at 30.3 million tons (Mt), and the fifth largest LNG exporter to China at 4.46 Mt.  Russia exported 30.1 Mt of LNG in 2021, of which 4.46 Mt was exported to China. 

To achieve Russia’s 140 mmty production target, the majority of the production increase is likely to come from projects located in Siberia.

Russia holds the largest gas reserves in the world, with more than half of them located in Siberia, according to state-owned Gazprom PJSC. But Siberia’s long winter months, cold temperatures and unfavorable light conditions are a challenge for constructing LNG projects.

At least ten projects are planned for Northern and Eastern Siberia to start-up in the next decade, according to a 2021 report from the Oxford Institute for Energy Studies. Additional capacity is also planned from existing projects, including Yamal LNG in Russia’s Far North, and Sakhalin 2, located on Sakhalin Island in the Okhotsk Sea.

Moreover, PAO Novatek is building the Arctic LNG 2 project in the Far North, which would have the capacity to produce 19.8 mmty. More than half the facility is complete. 

Yakutia LNG plans to reach a final investment decision (FID) in 2023. Globaltec is the operator and manager of the project. Natural gas and condensate producer Yatec JSC would supply the feed gas. Both companies are subsidiaries of Russian private company, A-Property, which is owned by Russian Oligarch Albert Avdolyan. 

A-Property acquired Yatec, Yakutia’s largest gas producer in 2019. Yatec will manage the construction and operation of  the 810-mile pipeline route to deliver gas from Kysyl-Syr in Yakutia to Ayan on the coast of the Sea of Okhotsk, for liquefaction and export.

Globaltec awarded the front-end engineering and design (FEED) contract last month to a consortium of Japan’s JGC Corp. and Norway’s Aker Solutions ASA. TechnipFMC plc completed the pre-FEED study in 2020. 

A second agreement was concluded in January between Zhejiang Energy International, a subsidiary of Chinese importer Zhejiang Energy Group Co. Ltd., and Globaltec. Zhejiang Energy would take a 10% equity share in Yatec and Globaltec. Zhejiang Energy would supply LNG to China under an offtake agreement.  .

Yatec is negotiating with Gazprom and the Russian Energy Ministry about the potential of LNG exports from the region, Yatec Executive Director Andrey Korobov reportedly said. According to news media reports, Korobov suggested that since Gazprom holds a license for a large block in Yakutia, there could be potential  to share the proposed export pipeline and LNG plant, or to employ Gazprom as an intermediary for LNG exports.