Russia’s Far East LNG hub may become price benchmark for Asia-Pacific

The largest liquefied natural gas (LNG) producer in Russia, Novatek, plans to build an LNG terminal on the Kamchatka Peninsula to boost supply to the fast-growing Asian markets.

“If we dream for a while, then the hub we plan in Kamchatka with a capacity of 120 million tons may also become one of gas sales indices in the Asia-Pacific,” said Novatek’s Chief Executive Officer Leonid Mikhelson.

He added that gas pricing will hopefully be less pegged to oil prices.

Novatek plans to develop the LNG throughput terminal project on the Kamchatka Peninsula in Russia’s Far East, close to the Asian markets. With a capacity of 20 million tons per year, the project is scheduled for commissioning in 2022-2023.

According to Mikhelson, Novatek forecasts significant growth in the LNG market in the midterm. The company estimates that LNG consumption volumes may more than double to 700 million tons in 2030.

The Russian firm has recently signed a preliminary agreement with Japan’s Saibu Gas, under which the companies will consider potential cooperation in entering the end-consumer LNG market in Asia.

Thanks to LNG storage hubs closer to Asian markets, Novatek could cut shipping costs and better meet spot demand in Asia, and in China in particular.

Russia is looking to boost LNG deliveries to the growing Asian market with storage hubs close to end-users to reduce freight costs and increase flexibility in deliveries.

For more stories on economy & finance visit RT's business section