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Defense Ministry's logistics company participates in northern city's LNG complex project

October 22, 2017, 11:46 UTC+3 ARKHANGELSK

The complex's projected annual capacity would be 13,000 tonnes

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ARKHANGELSK, October 22. The Oboronlogistika Company, working under jurisdiction of the Russian Defense Ministry, participates in the feasibility studies of a project on an LNG (liquified natural gas) complex in Novodvinsk - a mono-industrial city in the northern Arkhangelsk region. The complex's projected annual capacity would be 13,000 tonnes. At the first stage, the investments will make 1-1.5 billion rubles ($17.5 million -26 million), the company's Deputy Director General Alexander Lentsov said on Thursday at the forum - Arctic Projects - Today and Tomorrow, which was organized in Arkhangelsk. According to him, by 2029 the LNG consumption in the region may reach 300,000 tonnes.

"The LNG complex may be a project of an advance-development territory in Novodvinsk mono-industrial city and will favor its development," he said. "The geographic position of the Arkhangelsk region offers options for LNG supplies to the domestic market and to the neighboring Arctic regions, bunkering vessels along the Northern Sea Route. At the initial stage, the investments are estimated at 1-1.5 billion roubles for a complex with the capacity of 13-26 tonnes of LNG a year, and now the feasibility studies are under way. Investments in a complex with the capacity of up to 24 tonnes per hour and 200,000 tonnes a year are 30 billion rubles ($522 million)."

This project is important for Oboronlogistika, he continued. "The growing cargo flow along the Northern Sea Route requires modernization of the fleet. LNG will provide for economic and environmental effectiveness in implementation of Arctic projects."

The complex will also favor gas supplies to residents in the Arkhangelsk region's compounds, which still do not have gas, he continued. Besides, it would be possible to use gas instead of expensive fuel oil at boiler plants in towns and military units, and to supply inexpensive fuel to major industrial companies. Gas lines could go to far-away districts, including the Solovki Islands, and to the boiler plants along the shores.

Gas fuel for boiler plants at towns, military units

"First of all, we consider gas for boiler plants, gas supplies to private consumers and industrial companies, as well as gas fuel for the water and road vehicles," the logistics company's deputy director general said. "LNG is not a competitor of pipeline gas, it is an addition to it."

According to him, under the project the region's ministry of fuel and energy complex has approved a list of eleven boiler plants, using diesel and fuel oil now, which will receive gas fuel. They are located not far from the future complex. The planned annual consumption would be up to 23,000 tonnes of LNG, and the region would save 75 million rubles ($1.3 million) if those eleven plants use gas.

The project's authors have analyzed the Defense Ministry's boiler plants, which use diesel fuel. The calculation was based on 16 military units, where the annual consumption of LNG could be 65,000 tonnes.

The authors also considered potential of industrial companies. "In talks with The First Ore Mining Company, the demand at the Pavlovskoye project is estimated at 60,000 tonnes a year for the energy purpose and for using gas as engine fuel," he said, adding the development of the ore mining sector opens the opportunity of using LNG as fuel for heavy vehicles.

"Severalmaz (a part of the Alrosa diamond producing company) plans for 2018 first trials of a BelAZ 40-tonnes truck; and, if the project begins, we estimate the gas demand for their vehicles would be 23,000 tonnes a year," the director general said.

Hub for LNG supplies to the Arctic

Development of the transport and industrial infrastructures in the regionallows considering Arkhangelsk an LNG hub for vessels working along the Northern Sea Route and for LNG supplies to other Arctic regions, Oboronlogistika's representative said.

"Development of the projects Yamal-LNG, Arctic-LNG-2 and Pechora-LNG gives confidence to consumers in supplies of this new fuel," he said. "As the projects develop simultaneously, we shall always have an option of substituting suppliers in case of an emergency."

LNG bunkering is a rather developed direction in the world, which Russia only begins exploring, he added.

"Russia's environmental position, the higher requirements for vessel fuel mean that LNG bunkering could be a promising fast-developing market," he said. "Gas carriers may supply this fuel to floating storages, electric power plants, which may be organized quickly near consumers. Thus, we are speaking about cutting expenses for infrastructures, organization of gas supplies and of energy generation in far-away districts."

A possible, most convenient location, for the future complex is being considered now. "These projects may seem fantastic, but they are doable. A complex, producing 1.5 tonnes an hour, would take an area of one hectare. The potential, which may be met in 2019, is up to 100,000 tonnes a year. The option [of building up the complex's capacity] to 2029 is about 300,000 tonnes a year," Oboronlogistika's deputy director general said in conclusion.

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