Gazprom-Shell venture tests Russia's first LNG plant

A Gazprom and Royal Dutch Shell joint venture said they started testing a liquefied natural gas plant at Sakhalin, eastern Russia, a further step toward the country's first LNG export sales, scheduled for 2008.
The LNG facility at the Sakhalin-II project will be commissioned, or tested, using gas from Shell's LNG tanker Granosa, which docked at the plant's jetty in Prigorodnoye, the Sakhalin Energy Investment. venture said.

Granosa's arrival “signifies that the end of the construction phase is drawing near and we are beginning the transition to operations,” Frank van Wijk, who is in charge of LNG start-up operations, said.
Russia is the world's biggest gas producer, supplying one- quarter of Europe's needs, though it has lagged behind competitors Indonesia and Qatar in their ability to ship gas to overseas consumers such as Japan by cooling the fuel to liquid form. The project also completed installing the top of a new offshore production platform, the last of three in place off the northeast coast of Sakhalin-Island, north of Japan. The PA-B platform is 121 meters (397 feet) from the seabed to the top of the derrick, and as large as a 30-story building.

State-run Gazprom bought a majority holding in the oil and gas project, acquiring 50 % plus one share for $ 7.45 bn on April 18 from foreign owners Shell, Mitsui & Co. and Mitsubishi, after months of threats by the Russian government to halt the development on environmental grounds. The stakes held by the three foreign companies dropped to 27.5 %, 12.5 % and 10 %, respectively.
The PA-B installation was done with the “highest safety standards and within the established noise levels, without any impact on the Western Gray Whale population, whose feeding grounds lie some 7 km to the west,” a statement said.

Environmentalists say the project's offshore operations and onshore pipelines endanger whales and spawning salmon, cause soil erosion and risk oil spills. Fifteen environmental groups including Friends of the Earth and the Worldwide Fund for Nature wrote to Sumitomo Mitsui Banking Corp., ABN Amro Holding and other lenders, urging them not to fund Sakhalin-II, saying its environmental record hasn't improved since Gazprom took over.
Shell Chief Executive Officer Jeroen van der Veer, who will commemorate Shell's 100th anniversary at the company's headquarters in The Hague, described the Sakhalin-II project in July 2005 as the company's “crown jewel”. Shell had originally wanted to swap part of its Sakhalin equity for another Russian gas field asset, not cash.

The Granosa tanker carried its liquefied gas from an existing plant in Bontang, Indonesia, to the new plant at the southern end of Sakhalin-Island.
The chilled gas will be used to cool equipment such as storage tanks and for the start-up and testing of flare systems, gas-turbine generators and compressors.