South Korea's Daewoo is currently building transshipment barges that will help significantly cut shipping times for liquefied natural gas cargoes bound for Asia and Europe from the giant Yamal LNG and Arctic LNG 2 projects.
Back in June, Daewoo Shipbuilding & Marine Engineering won an order to build LNG barges for Russian project sponsor Novatek. The two 360,000 cubic metre barges have a total price of US$748 million, with an option for two additional units. Daewoo expects to deliver the first two by the end of 2022.
The barges will allow the transfer cargoes from the costly icebreaking LNG carriers that serve Novatek's Yamal LNG plant in the Russian Arctic onto general-purpose LNG carriers at intermediate positions along the route to the market.
One of the terminals will be stationed at Kamchatka and a second one near Murmansk, just outside of the icebound portions of the Northern Sea Route.
They will also service the Arctic LNG 2 project that is currently under development. This involves the construction of three LNG trains, with a capacity of 6.6 million tonnes per annum (mtpa) of LNG each, and at least 1.6 mtpa of stable gas condensate.
The Utrenneye field is the resource base for Arctic LNG 2. It is located on the Gydan Peninsula, 70 kilometres across the Ob Bay from Yamal LNG.
Project in progress
The Arctic LNG 2 project is 60% owned by Novatek. The other shareholders are Total (10%), China National Petroleum Corporation (10%), China National Offshore Oil Corporation (10%) and Mitsui/Jogmec (10%).
Capital expenditure to launch the project at full capacity is estimated at US$21.3 billion. At the end of September 2020 overall progress on Arctic LNG 2 was estimated at 27%.
The floating LNG storage and transshipment units are being developed along with Japan’s Mitsui O.S.K. Lines (MOL). The barges will be able to hold the contents of two of the icebreaking vessels – enough cargo to fill three standard LNG carriers for final deliveries to EU and Asian markets.
Daewoo has been heavily involved in building LNG carriers for the Russian LNG projects. In October it received two orders for a total of six LNG carriers. Three of the vessels are scheduled for delivery by the end of July 2023, and the other three by December 2023. Icebreaking LNG carriers cost around US$294 million.
In late October MOL signed charter agreements with Arctic LNG 2 for three of the icebreaking LNG carriers being built by Daewoo.
The MOL vessels will mainly transport LNG from an LNG loading terminal on the Gydan Peninsula in the Russian Arctic to the floating LNG storage units (FSUs) to be installed at the transshipment terminal in Kamchatka (eastbound) and Murmansk (westbound) via the Northern Sea Route.
Compared with MOL's previous icebreaking LNG carriers, which can only sail eastbound in the Northern Sea Route during summer and autumn when the ice is thin, the new vessels will have a narrower width, hull form optimized for ice breaking, and an increased propulsion engine output which will enable the vessels to sail east via the Northern Sea Route all year round.
The combination of these icebreaking LNG vessels, which can transport LNG to the FSUs in the east and west throughout the year, and conventional LNG carriers that will transport LNG from the FSUs to their final destinations, will enable efficient year-round transportation of LNG from the Russian Arctic to areas of demand, including those in Asia.
The eastbound transportation route will reduce the distance of the voyage by approximately 65% compared to the westbound route via the Suez Canal for Asian destinations.
MOL has been engaged in transporting LNG using three icebreaking LNG carriers on the Northern Sea Route since March 2018 for the existing Yamal LNG project.
The new contracts are in line with the direction MOL declared in its "Rolling Plan 2020", namely to strategically allocate management resources in businesses where the company is particularly strong.
In early December Novatek announced that wholly owned subsidiary Novatek Gas & Power Asia and Saibu Gas Co of Japan had successfully completed their first joint trial delivery of LNG in ISO containers (manufactured according to the specifications set by the International Organization for Standardization) to China's Tiger Gas for subsequent sales of LNG in China.
The LNG was delivered by sea in Tiger Gas-owned ISO containers from the Japanese Hibiki container terminal to Shanghai under a spot contract. The containers were then loaded onto trucks.
Lev Feodosyev, Novatek’s first deputy chairman of the management board, said ISO containers of LNG are forecast to exponentially increase over the coming decades, allowing the company to diversify its customer base by including small-scale LNG consumers and entering the downstream markets in China and Japan.