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Putin launches giant $27bn LNG project in Arctic

SABETTA (AFP) – President Vladimir Putin on Friday launched a $27 billion liquefied natural gas plant in the snow-covered plains of the Arctic as Russia hopes to surpass Qatar to become the world s biggest exporter of the chilled fuel.

The Russian president congratulated workers as he oversaw the first gas shipment being loaded onto an icebreaking tanker from a LNG plant amid minus 28 degrees Celsius (minus 18 degrees Fahrenheit) weather in the port of Sabetta on the Yamal Peninsula above the Arctic Circle.

“This is a large-scale project for Russia,” Putin said. “At the start of the project, people told me not to pursue this. Those who started this project took a risk but achieved a result.”

Saudi Arabian Energy Minister Khalid al-Falih and other top officials were present for the occasion.

For the project, Russia s privately owned gas producer Novatek partnered with France s Total and China s CNPC.

Qatar is currently the world s biggest LNG exporter.

Russia, the world s biggest gas exporter, derives a huge share of income from pipeline deliveries to Europe.

With the Yamal LNG facility Russia intends to strengthen its market presence in Asia and demonstrate its capacity to exploit huge Arctic reserves despite major technological challenges.

On time and on budget

Dmitry Monakov, the project s first deputy director, said that producing LNG in permafrost was easier than in warmer climes, an apparent dig at countries like Qatar.

“Nature itself helps us to more effectively liquify gas with the help of such low temperatures,” he told AFP, adding that the plant effectively sat on a gas field so transportation costs were low.

Patrick Pouyanne, Total chairman and CEO, praised the project s “remarkably low upstream costs”.

“Together we managed to build from scratch a world-class LNG project in extreme conditions to exploit the vast gas resources of the Yamal peninsula,” he was quoted as saying in a company statement.

The tanker carrying the first LNG cargo is named after Christophe de Margerie, a former Total CEO who died in an accident on a runway of a Moscow airport in 2014.

White whiskers have been painted on it in honour of the late CEO, who was known for his white bushy moustache.

The tanker would most likely leave tomorrow morning towards China, Novatek CEO Leonid Mikhelson said in a press briefing late Friday.

The site is operated by Yamal LNG company, owned by Novatek (50.1 percent), Total (20 percent), CNPC (20 percent) and Silk Road Fund (9.9 percent).

The $27 billion (23 billion euro) project is set to start with a production capacity of 5.5 million tonnes per year and increase it to 16.5 million tonnes by the start of 2019.

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