Sakhalin Energy expects to cut exports of liquefied natural gas (LNG) to 166 cargoes this year from a record-high 178 in 2020 after recently launching its largest overhaul since opening in 2009, the Russian firm’s CEO said.
Controlled by gas giant Gazprom GAZP.MM, Sakhalin Energy supplies LNG to the Asia-Pacific and has major customers in China, Japan, South Korea and Taiwan.
CEO Roman Dashkov said the overhaul includes maintenance and upgrades and is being carried out despite challenges posed by the pandemic.
“Those are technological facilities and IT systems. In the first place, this is related to the possibility of our production capacity expansion,” he said, adding the work, which began on July 9, is due to last around 37 days.
The company said it had notified its major customers about the maintenance.
Located on the southern tip of the Russian Pacific island of Sakhalin, the company produced and shipped record volumes of LNG in 2020, topping 11.6 million tonnes and accounting for 3.2% of the global LNG demand. One LNG cargo is around 65,000 tonnes.
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Sakhalin Energy has long planned to build a third production line, but the plans have been hampered by lack of necessary gas resources under the company’s ownership in the region.
It had been in talks with another Production Sharing Agreement project in Russia, the Rosneft-led ROSN.MM Sakhalin 1, on possibility of using its gas.
“We are ready to take part in the talks if any such opportunity arises,” Dashkov said.
He added that the company is still considering building a third line, or train. The plant would be able to process 24 billion cubic metres of gas per year to produce up to 16 million tonnes of LNG.
By around 2030 the project will see production start to decline due to “natural depletion of our fields”, Dashkov said.
Sakhalin Energy stakeholders include Gazprom with a 50% stake plus one share, Royal Dutch Shell RDSa.L with 27.5% minus one share, and Japanese firms Mitsui 8031.T and Mitsubishi Corp 8058.T with 12.5% and 10%, respectively.
Source: Reuters (Reporting by Vladimir Soldatkin; editing by Jason Neely)