LNG Business Development

LNG business development is one of the key priorities of Gazprom Group operations. Its aim is to increase natural gas export volumes by entering new markets inaccessible to pipeline supplies. Gazprom Group has been actively ramping up volumes of its LNG trading portfolio both through the implementation of its own projects as well as through LNG purchases from third parties. The portfolio approach to LNG trade operations makes it possible to react quickly to changing market conditions, follow the geographical diversification of supplies, and to optimize transportation costs.

The aggregator of LNG volumes and operator of the Group’s trading portfolio is Gazprom Marketing & Trading company. 

Large-Scale LNG

The basis of Gazprom Group’s LNG trading portfolio currently consists of LNG supply from the Sakhalin II project. Additionally, LNG is also purchased from third parties under fixed-term agreements and spot deals. In 2005–2019, Gazprom Marketing & Trading delivered over 450 LNG shipments (including 190 from the Sakhalin II project) of total volume around 32 mln t to the markets of over 15 countries. In 2019, Gazprom Group sold 54 LNG shipments of a total volume of 3.8 mt.

Gazprom Group is actively operating in LNG markets of the Asia-Pacific Region, delivering both to traditional markets, like Japan, South Korea, Taiwan, as well as to the fast-growing markets of China, India, and Southeast Asia. In 2018, Gazprom Marketing and Trading Singapore started LNG deliveries to the Indian GAIL Limited.

To expand its market presence in the countries of the Atlantic basin, Gazprom is also working to develop its own LNG project in Leningrad Region. In March 2019, PJSC Gazprom and JSC RusGazDobycha have started the implementation stage of the large-scale complex project aimed at processing ethane-containing gas and producing LNG near the settlement of Ust-Luga, Leningrad Region. The project envisages construction of capacities for the processing of 45 billion cubic meters of gas and for production and shipping of 13 million tons of LNG, up to 4 million tons of ethane and over 2.2 million tons of liquefied petroleum gases (LPG) per year. The gas remaining after the processing will be sent into Gazprom’s gas transmission system. The first train of the complex is expected to be put into operation in the second half of 2023 and the second train in late 2024.

Another project that can increase the volume of Gazprom Group’s LNG trading portfolio in the Atlantic region is a complex for the production, storage, and shipment of LNG in the Portovaya compressor station (CS Portovaya), with a capacity of 1.5 mt of LNG per year. The construction of the project is nearing its completion.

Gazprom Export, being in charge of marketing the LNG from the Portovaya project, concludes contracts, including those on remote delivery basis; and develops its own competences in the sea logistics and operational support of LNG deliveries. In April 2019, Gazprom Export and OMV Gas Marketing and Trading have signed a Sales and Purchase agreement that foresees supply of 12 LNG cargoes with a total volume of 0,9 mt for the Austrian company in 2020. In June 2019, a framework agreement with another potential LNG buyer from the Portovaya LNG plant, the Gazprom Marketing and Trading company, was concluded. To provide sea transportation of large-scale LNG cargoes, in October 2019, a freight agreement for the floating regasification unit “Marshal Vasilevsky” was concluded. This was the first LNG tanker freight agreement for Gazprom Export.

Gazprom Group is also expanding its LNG portfolio through purchases from third-party projects. In 2015, Gazprom Marketing & Trading Singapore signed long-term contracts for LNG purchase from the Yamal LNG and Cameroon LNG projects.  The supplies started in 2018. 

Small-Scale LNG (ssLNG)

In 2019, Gazprom Export has exported 443,5 mt of ssLNG, which is over 9 times more than in 2018. The most of this growth resulted from the start of ssLNG sea shipping from the Vysotsk LNG plant, the first medium-scale LNG project on the Baltic sea. From March through December 2019, in 96 ship entries, altogether 381,5 mt of ssLNG was loaded.

Also in 2019, the first ever shipment of ssLNG from Russia to Mongolia in the railway cryocontainers was performed.