Ust Luga LNG Terminal

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Ust Luga LNG Terminal (Russian: СПГ-терминал в Усть-Луге), formerly known as Baltic LNG Terminal, is a liquefied natural gas (LNG) export terminal proposed in Russia.

Location

The terminal is proposed to be located in Ust-Luga Port, Kingiseppsky District, Leningrad Oblast, Russia.

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Project details

Train 1

• Operator: RusKhimAlyans
• Owner: RusKhimAlyans
• Parent company: Gazprom [50%], RusGazDobycha [50%]
• Location: Ust-Luga Port, Kingiseppsky District, Leningrad, Russia
• Coordinates: 59.76812511089331, 28.44062603769416 (approximate)
• Capacity: 6.55 mtpa
• Status: Proposed
• Type: Export
• Start year: 2024; delayed to 2027
• Cost: RUB 3 trillion (the whole complex: LNG plant, gas-to-polymers processing facility, and the terminal)
• Financing: US$12.2 billion from Russian National Welfare Fund, RUB 445 billion loan from VEB bank

Train 2

• Operator: RusKhimAlyans
• Owner: RusKhimAlyans
• Parent company: Gazprom [50%], RusGazDobycha [50%]
• Location: Ust-Luga Port, Kingiseppsky District, Leningrad Oblast, Russia
• Coordinates: 59.76812511089331, 28.44062603769416 (approximate)
• Capacity: 6.55 mtpa
• Status: Proposed
• Type: Export
• Start year: 2025; delayed to 2028
• Cost: RUB 3 trillion (the whole complex: LNG plant, gas-to-polymers processing facility, and the terminal)
• Financing: US$12.2 billion from Russian National Welfare Fund, RUB 445 billion loan from VEB bank

Train 3

• Operator: RusKhimAlyans
• Owner: RusKhimAlyans
• Parent company: Gazprom [50%], RusGazDobycha [50%]
• Location: Ust-Luga Port, Kingiseppsky District, Leningrad Oblast, Russia
• Coordinates: 59.76812511089331, 28.44062603769416 (approximate)
• Capacity: 6.5 mtpa
• Status: Proposed
• Type: Export
• Start year: 2026

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Background

Baltic LNG Terminal was a proposed liquefied natural gas (LNG) liquefaction terminal in Leningrad Oblast, Russia. In June 2017, Gazprom and Shell set up a joint venture to pursue the project. The project was set to go online in 2022-23. The 2019 plan stated the supply would come from the Tambey fields on the Yamal Peninsula in West Siberia.

In December 2018 Gazprom and Itochu signed a memorandum of understanding (MOU) to jointly pursue the project. In April 2019 Shell announced that it was withdrawing from the project. Shell's departure was due to Gazprom integrating the Baltic LNG project and gas processing plants and its setting up of the special purpose vehicle RusKhimAlyans, a 50-50 joint venture with its Russian partner RusGazDobycha, which is said to have links to an ally of Russian President Vladimir Putin.

In May 2021, Gazprom announced that it had commenced construction on the gas complex site at the port of Ust-Luga. Linde and Renaissance Heavy Industries have been contracted to build the two-train 13 mtpa LNG export terminal. In December 2021, Gazprom announced that its board had approved a memorandum with Linde regarding the construction of a third liquefaction train at the gas and LNG complex. No details about the planned Train 3 were provided. In November 2021, Mitsubishi Heavy Industries was contracted to supply the main refrigeration gas compression trains.

As of late 2021, estimates of the terminal's start-up date ranged from 2024 to 2026. However, Gazprom's relative lack of experience with LNG projects and its need to pivot from European to Asian markets in response to the Russia-Ukraine war have raised questions about the terminal's future.

According to the IGU World LNG Report 2022, Baltic LNG Terminal was renamed to Ust Luga LNG Terminal. According to IGU, as of 2022 the expected start year was 2025 for both trains.

Linde GmbH left the project following the invasion of Ukraine. The project, including the two trains to produce 13 mtpa of LNG and a complex to process ethane is estimated at RUB 3 trillion.

Following the Russian invasion of Ukraine, the sanctions and the withdrawal of partners, including Linde GmbH, may have delayed the project. Russia was considering alternatives such as domestic turbines or partnering with China. As of July 2023, the status of the project was uncertain.

In December 2023, the US imposed new sanctions on Russian companies contracted to provide equipment for the Ust-Luga gas processing plant and LNG project: Northern Technologies LLC, Kazan Compressor Machinery Plant JSC, and Gazprom Linde Engineering LLC.

In August 2024, a regional governor A. Drozdenko stated that construction of the plant will be delayed by 2 years. As of September 2023, it does not appear that construction has started yet since a potential site for construction of the trains has not yet been identified.

In February 2024, the terminal's owner and operator RusKhimAlyans has been directly included in the new round of US sanctions.

In February 2024 it was reported that the terminal should start operating in 2027 and was expected to reach its full production capacity of 13.1 mtpa (Trains 1 and 2) by January 1, 2029. Construction of both Trains 1 and 2 was expected to start in 2024; commissioning of Trains 1 and 2 was expected to take place in 2027 and 2028 respectively.

Financing

In August 2020, the Russian state-owned development bank VEB said it was providing Gazprom with a US$741 million loan for the project. The overall project costs are said to be at least US$12 billion.

In March 2021, Russian business daily Kommersant reported that the project's engineering, procurement and construction (EPC) contractor NIPIGAZ had either been dismissed or had resigned. Kommersant speculated that this may have been due to the general lack of funding in place for the project, with the Russian state potentially keen to employ China National Chemical Engineering Construction Company Limited (CC7) as the EPC contractor as part of a larger deal aimed at attracting necessary additional financing from Chinese banks. However, in the later part of 2021, reportedly Ruskhimalliance signed contracts for the projects EPC with a consortium of Germany’s Linde and Turkey’s Renaissance Heavy Industries.

In September 2021, Russian authorities disclosed plans to fully finance the LNG terminal. The 12.2 billion USD (900 billion rubles) line of credit is reportedly "unprecedented for a single lender."

As of February 2024, main sources of financing included: "borrowed funds - at least 2.882 trillion RUB, which will be repaid within 16 years; own capital and funds of partners - at least 1.235 trillion RUB; funds of the National Welfare Fund - 900 billion RUB (split equally between the gas-processing complex and the gas-chemical complex)."