First Gas Carrier Loaded at New LPG Transhipment Terminal in Northwest Russia

A formal ceremony was hosted yesterday at the Ust-Luga commercial sea port to mark the first loading of a gas carrier with liquefied petroleum gas (LPG) at SIBUR’s new transhipment facility for LPG and light oils.

The ceremony was attended by Maksim Sokolov, the Russian Transport Minister; Alexander Drozdenko, Governor of the Leningrad Region; Kirill Molodsov, Deputy Minister of Energy of the Russian Federation; Leonid Mikhelson, Chairman of the Board of Directors of SIBUR Holding and Chairman of NOVATEK’s Management Committee; and Dmitry Konov, CEO of SIBUR.

SIBUR’s Ust-Luga terminal is the largest in the CIS and the first in Northwest Russia to tranship LPG. The terminal is capable of handling up to 1.5 million tonnes of LPG and up to 2.5 million tonnes of light oils each year. SIBUR’s estimated investments in the project totalled approximately RR 25 billion.

The terminal’s distinguishing feature is its isothermal LPG storage tanks and its compatibility with almost all existing vessels, including refrigerated ships. The cooling process enables liquefied gas to be transported in large shipments; a refrigerated vessel using cooled LPG can carry up to ten times that of pressurised gas carriers.

Its functionality allows for transhipment of up to 1.1 million tonnes of cooled LPG and up to 0.4 million tonnes of pressurised LPG per annum. The terminal is capable of simultaneously storing 40 thousand cubic metres of LPG in isothermal tanks and 10 thousand cubic metres in pressurised tanks. Light oil transhipment facilities with a storage capacity of 100 thousand cubic metres have opened up another export opportunity for Russian oil and gas companies.

Vessels can be loaded at the same speed as other similar terminals globally – a gas carrier with a capacity of 40 thousand cubic metres requires no more than 24 hours to be filled while loading a 52 thousand cubic metres tanker takes 36 hours at most.

The terminal’s location offers excellent access to the Northwest European markets. Until now, Russian LPG has been delivered to Europe either by land or via foreign ports on the Black Sea or Baltic Sea. The Ust-Luga terminal represents the first stage in creating a sea transhipment infrastructure in Russia which will reduce dependency on foreign ports. The new facility, which is navigable all year round, allows SIBUR to optimiseits transportation costs by redirecting existing export flows through a more efficient route.

SIBUR’s terminal will also improve the economic potential of associated petroleum gas (APG) utilisation as it is processed into LPG, light oils and other products.

The terminal in Ust-Luga is a federal project supported by the Government, whose involvement is reflected in a partnership agreement between SIBUR and Russian Railways until 2020, and a trilateral agreement between SIBUR, Rosmorport, and the Russian Federal Agency for Maritime and River Transport.

Following the official loading ceremony, Alexander Drozdenko, Governor of the Leningrad Region, and Dmitry Konov, CEO of SIBUR, signed an agreement for a social and economic partnership until 2015. The agreement will help SIBUR to improve the social environment in the region by partnering with regional authorities on environmental protection efforts, chemical research and education initiatives. SIBUR will also continue its housing construction programme for the new terminal’s employees, with special consideration given to preserving the traditional way of life of the Votes, a small community indigenous to the area.

The role of the regional authorities will be to create a favourable investment environment for the company’s projects in the region.