Baltic LNG
Encyclopedia
Baltic LNG was a liquefied natural gas
plant project developed by Baltic LNG AG, a subsidiary of Gazprom
. The plant was to be built on the Gulf of Finland
of the Baltic Sea
in Primorsk, Leningrad Oblast
, in Russia.
(later in Zürich
) as a joint venture of Gazprom
and Sovkomflot
. In 2005, Gazprom started to negotiate with Petro-Canada
to construct the LNG plant and to conclude a supply agreement for LNG shipments to Canadian market. On 14 March 2006, Gazprom and Petro-Canada signed an agreement to proceed with initial engineering design of the Baltic LNG plant. It was agreed to ship LNG from the Baltic LNG plant to Petro-Canada's LNG regasification facility in Gros-Cacouna, Quebec
.
In 2006, Gazprom started to look for other markets and partners inviting 17 energy companies from Europe, Asia and North America for negotiations. On 21 September 2007, Gazprom decided to continue work on the feasibility study, leaving it unclear when it would make a final decision whether to build the plant. On 7 February 2008, Gazprom terminated the project because it considered the Baltic LNG plant less competitive than other projects in the region — the Nord Stream pipeline and the possible LNG facility of the Shtokman field
.
s would be built. The LNG plant was expected to cost US$3.7 billion and it was to become operational by 2012. The technically design of the project was done by Giprospetsgaz, a subsidiary of Gazprom, and KBR, a subsidiary of Halliburton
. The LNG plant was to be supplied from the Russian unified natural gas grid, including from the onshore section of Nord Stream pipeline, and from the Shtokman field
.
, and ice conditions. Another risk was that there is not capacity in the unified natural gas system in the Leningrad Oblast, and the project might require expansion of the pipeline grid.
, Eni
and Mitsubishi
. In September 2007, media reported that also Spain's Iberdrola
was talking with Gazprom about its participation in the project.
Liquefied natural gas
Liquefied natural gas or LNG is natural gas that has been converted temporarily to liquid form for ease of storage or transport....
plant project developed by Baltic LNG AG, a subsidiary of Gazprom
Gazprom
Open Joint Stock Company Gazprom is the largest extractor of natural gas in the world and the largest Russian company. Its headquarters are in Cheryomushki District, South-Western Administrative Okrug, Moscow...
. The plant was to be built on the Gulf of Finland
Gulf of Finland
The Gulf of Finland is the easternmost arm of the Baltic Sea. It extends between Finland and Estonia all the way to Saint Petersburg in Russia, where the river Neva drains into it. Other major cities around the gulf include Helsinki and Tallinn...
of the Baltic Sea
Baltic Sea
The Baltic Sea is a brackish mediterranean sea located in Northern Europe, from 53°N to 66°N latitude and from 20°E to 26°E longitude. It is bounded by the Scandinavian Peninsula, the mainland of Europe, and the Danish islands. It drains into the Kattegat by way of the Øresund, the Great Belt and...
in Primorsk, Leningrad Oblast
Primorsk, Leningrad Oblast
Primorsk is a coastal town in Vyborgsky District of Leningrad Oblast, Russia, and the largest Russian port on the Baltic. It is located on the Karelian Isthmus, west of St. Petersburg, at the northern coast of the Gulf of Finland, near Birch Islands, protected as a sea bird sanctuary...
, in Russia.
History
Preparations of the Baltic LNG project started in 2004. On 15 October 2004, Baltic LNG AG was registered in Baar, SwitzerlandBaar, Switzerland
Baar is a village in the canton of Zug in Switzerland.-Geography:Baar has an area, , of . Of this area, 55% is used for agricultural purposes, while 24.5% is forested...
(later in Zürich
Zürich
Zurich is the largest city in Switzerland and the capital of the canton of Zurich. It is located in central Switzerland at the northwestern tip of Lake Zurich...
) as a joint venture of Gazprom
Gazprom
Open Joint Stock Company Gazprom is the largest extractor of natural gas in the world and the largest Russian company. Its headquarters are in Cheryomushki District, South-Western Administrative Okrug, Moscow...
and Sovkomflot
Sovkomflot
Sovkomflot is a Russian maritime shipping company specializing in petroleum and LNG shipping, a 100% state-owned corporation founded in 1995. Since December 5, 2006, its headquarters are located in Saint Petersburg. It is headed by Director General Sergei Frank...
. In 2005, Gazprom started to negotiate with Petro-Canada
Petro-Canada
Petro-Canada was a crown corporation of Canada in the field of oil and natural gas. It was headquartered in the Petro-Canada Centre in Calgary, Alberta. In August, 2009, Petro-Canada merged with Suncor Energy, a deal in which Suncor investors received approximately 60 per cent ownership of the...
to construct the LNG plant and to conclude a supply agreement for LNG shipments to Canadian market. On 14 March 2006, Gazprom and Petro-Canada signed an agreement to proceed with initial engineering design of the Baltic LNG plant. It was agreed to ship LNG from the Baltic LNG plant to Petro-Canada's LNG regasification facility in Gros-Cacouna, Quebec
Quebec
Quebec or is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking population and the only one whose sole official language is French at the provincial level....
.
In 2006, Gazprom started to look for other markets and partners inviting 17 energy companies from Europe, Asia and North America for negotiations. On 21 September 2007, Gazprom decided to continue work on the feasibility study, leaving it unclear when it would make a final decision whether to build the plant. On 7 February 2008, Gazprom terminated the project because it considered the Baltic LNG plant less competitive than other projects in the region — the Nord Stream pipeline and the possible LNG facility of the Shtokman field
Shtokman field
The Shtokman field , one of the world's largest natural gas fields, lies in the central part of Russian sector of the Barents Sea, north of Kola Peninsula. Its reserves are estimated at of natural gas and more than 37 million tons of gas condensate.-History:The Shtokman field was discovered...
.
Technical features
The project foresaw a capacity of 5–7.2 million tonnes of LNG per year, depending on whether one or two LNG trainLNG train
An LNG train is the term used to describe the liquefaction and purification facilities in a liquefied natural gas plant.In order to make it practical and commercially viable to transport natural gas from one country to another, its volume has to be greatly reduced...
s would be built. The LNG plant was expected to cost US$3.7 billion and it was to become operational by 2012. The technically design of the project was done by Giprospetsgaz, a subsidiary of Gazprom, and KBR, a subsidiary of Halliburton
Halliburton
Halliburton is the world's second largest oilfield services corporation with operations in more than 70 countries. It has hundreds of subsidiaries, affiliates, branches, brands and divisions worldwide and employs over 50,000 people....
. The LNG plant was to be supplied from the Russian unified natural gas grid, including from the onshore section of Nord Stream pipeline, and from the Shtokman field
Shtokman field
The Shtokman field , one of the world's largest natural gas fields, lies in the central part of Russian sector of the Barents Sea, north of Kola Peninsula. Its reserves are estimated at of natural gas and more than 37 million tons of gas condensate.-History:The Shtokman field was discovered...
.
Risks
Gazprom identified a number of risks related to the project. According to Igor Meshcherin, head of Gazprom's project evaluation directorate, environmental risks are the congested Gulf of Finland and Danish StraitsDanish straits
The Danish straits are the three channels connecting the Baltic Sea to the North Sea through the Kattegat and Skagerrak. They transect Denmark, and are not to be confused with the Denmark Strait between Greenland and Iceland...
, and ice conditions. Another risk was that there is not capacity in the unified natural gas system in the Leningrad Oblast, and the project might require expansion of the pipeline grid.
Project company
The project was developed by Baltic LNG AG, a joint venture between Russian companies Gazprom (80% of shares) and Sovkomflot (20%). The head of the company was Alexander Krasnenkov. The plan was to involve foreign partner or partners into the project in terms that Gazprom could remain 51% of shares. In 2006, Gazprom invited 17 companies to participate, of which 15 showed interest. In April 2007, Gazprom shorted list to four companies. They were Petro-Canada, BPBP
BP p.l.c. is a global oil and gas company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-largest company in the world measured by revenues and one of the six oil and gas "supermajors"...
, Eni
Eni
Eni S.p.A. is an Italian multinational oil and gas company, present in 70 countries, and currently Italy's largest industrial company with a market capitalization of 87.7 billion euros , as of July 24, 2008...
and Mitsubishi
Mitsubishi
The Mitsubishi Group , Mitsubishi Group of Companies, or Mitsubishi Companies is a Japanese multinational conglomerate company that consists of a range of autonomous businesses which share the Mitsubishi brand, trademark and legacy...
. In September 2007, media reported that also Spain's Iberdrola
Iberdrola
Iberdrola , headquartered in Bilbao, is a private utility with a global footprint and over 150 years of experience...
was talking with Gazprom about its participation in the project.