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Russia’s first liquefied natural gas (LNG) import facility in the exclave Kaliningrad on the Baltic Sea is close to start-up, S&P Global Platts reported on Friday, citing vessel tracking data and Asia-based traders.
The region of Kaliningrad, a Russian exclave squeezed in between Poland and Lithuania and without a land or maritime border with Russia, has been receiving natural gas supplies via the Minsk – Vilnius – Kaunas – Kaliningrad transit gas pipeline. Due to the region’s location, Russia’s gas giant Gazprom has been building the Kaliningrad LNG import, storage, and regasification terminal. LNG regasification will be carried out with a floating LNG unit (FLNG), according to Gazprom’s plans.
According to S&P Global Platts vessel tracking and to shipping data provider VesselsValue, a newbuild Floating Storage Regasification Unit (FSRU), named Marshal Vasilevskiy, loaded a cargo of LNG at Singapore earlier in November and is heading for delivery.
This Asia-Europe LNG trade flow is a reversal of the typical Atlantic basin-Asia LNG flows. Gazprom must have procured the LNG cargo at an attractive price in order to make the arbitrage from Asia to Europe viable, traders based in Singapore told Platts.
Platts Analytics assumes that the Kaliningrad FSRU will begin operations in January 2019, senior gas analyst Andre Lambine said.
According to Gazprom, the Kaliningrad Region will be able to receive up to 2.7 billion cubic meters of gas per year thanks to the LNG import terminal, which will bolster the region’s energy security and make it self-sufficient with natural gas if need be.
Ironically, Kaliningrad’s two land neighbors—Poland and Lithuania—are striving for their own energy security by lessening their dependence on Gazprom’s pipeline gas. Poland and Lithuania are among the European Union’s (EU) most vocal opponents to the Gazprom-led pipeline project Nord Stream 2 from Russia to Germany via the Baltic Sea, and have signed LNG supply deals to import LNG from the United States.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.