Russian authorities have promised strong backing to a recently announced plan by the country’s largest independent gas producer, Novatek, to build a liquefied natural gas export plant near the northern port of Murmansk on the Barents Sea.

Speaking in Moscow on Monday, Russian Deputy Prime Minister Alexander Novak described the proposal — already codenamed Murmansk LNG — as “forward-looking and expedient”, according to Russian state news agency Tass.

Novak conceded he had earlier chaired a special meeting on Novatek’s proposal and has instructed ministries and state-owned companies to “work out details” for supporting its implementation.

The proposal is “fully consistent with state strategy for the development of the production of LNG in the current [hostile] environment. It is absolutely expedient for the development of the Arctic and the fostering of LNG [production],” Novatek said.

Last week, the company shared details of its Murmansk LNG proposal to Russian media and later copied published information on the project in its social network channels. However, it avoided making any official pronouncement of the plan.

Murmansk LNG detailed

The proposal reportedly calls for Novatek to agree to build a 1300-kilometre pipeline from Russia’s gas transmission network, operated by state giant Gazprom, to Murmansk, to feed about 30 billion cubic metres of natural gas to the region.

The plan calls for the facility, with three 6.8 million tonnes per annum liquefaction trains, to be built at a yet-to-be selected location near Murmansk.

Novatek apparently proposes to assemble modules for the trains at large workshops the company built in a specialised yard near the village of Belokamenka, which is now working on the first two trains for another Novatek-operated project — Arctic LNG 2.

With international sanctions limiting Russian access to western-made gas turbines to drive powerful compressors at the country’s LNG plants, Novatek has asked Russian contractors to replace such turbines with electric motors.

Power to the proposed plant is scheduled to be supplied by a Russian state nuclear facility Kola NPP, located about 200 kilometres from Murmansk. It is listed as having a nameplate capacity of about 1.8 gigawatts, according to operator Rosatom.

A Rosatom spokesperson told Moscow business daily RBK that an estimated 900 megawatts of Kola NPP’s output may become available to Murmansk LNG at a discount to the ongoing rate.

Last year, Novatek executive chairman Leonid Mikhelson said the company was co-operating with Russian manufacturers to design and produce the first electric turbines for its LNG project. At the time, he estimated that each train would require 400 megawatts of power.

Gazprom, which holds a 10% stake in Novatek, has remained silent on the latter’s proposal, although the independent producer said it has already asked the state gas monopoly to determine the point where a pipeline connection to its transmission network may be made.

Novatek did not respond to a request from Upstream to clarify the expected gas purchasing options with Gazprom, which is facing a steep decline in production after losing estimated 100 Bcm of annual gas sales to Europe.

Speaking in Belokamenka on Monday, Mikhelson asked Russian legislators to remove Gazprom’s monopoly over LNG exports and permit Novatek to directly export LNG manufactured from Gazprom-produced gas, according to Moscow-based news agency Prime.

The Russian government has granted an exception from the gas export law to Novatek’s Yamal LNG, Arctic LNG 2 and other LNG projects in remote locations and that do not draw Gazprom-produced gas from its transmission network.

Mikhelson said that using Gazprom subsidiaries to ship future production of Murmansk LNG to export destinations is not a viable option because foreign customers are often prevented by international sanctions from paying Gazprom’s units and the Russian requirement to pay in roubles instead of US dollars and euros.

Gazprom’s saviour

A partner in Moscow-based energy consultancy RusEnergy, Mikhail Krutikhin, said that the Murmansk LNG proposal “looks more like a state-backed effort from Novatek to save Gazprom” after the loss of European markets.

This year, industry analysts expect Gazprom’s operating and financial performance to hit the lowest point in the company’s history of more than three decades.

Novatek’s Murmansk LNG proposal may permit Gazprom to find a destination for about one-third of its lost export volumes by 2027 or 2028 when Novatek expects the liquefaction project to be commissioned — two to three years before the anticipated commissioning of Gazprom’s largest gas export pipeline to China, known as Sila Sibiri 2, according to Krutikhin.

The pipeline, the terms of which Gazprom has yet to agree with China, is set to transport about 50 Bcm of gas from its fields in West Siberia across Mongolia to its neighbour.