LNG projects in Yamal are planned to be actively developed via the use of Russian equipment

Technological independence. In today’s modern post-industrial world these are not products and services that compete. A fiercest fight of global capitals has broken out on the front lines of cutting-edge ideas and technologies. At the current stage of the global economic integration such areas as cosmonautics, nuclear energy, and energy supply are our main front-line regiments in the process of peaceful redistribution of the international economic influence.

At the same time, we have to admit that foreign know-hows are strongly integrated into our economy. Software, mechanical engineering, technologies in hydrocarbon exploration, production and processing.

Lack of independence from non-our technological solutions in our strategic industries is always a vulnerability in high politics. The is no other alternative than to ensure imports substitution for further sovereign development of Russia. How to do that within the shortest time frames on the front line of natural gas processing has been discussed at a large government meeting in Sabetta.

They have started to construct the fourth technological line at Yamal LNG. It is planned to put it in operation by the end of this year. One of the key features of this line is that it will use only Russian equipment. 60 contracts with Russian companies have already been signed. The head of NOVATEK is sure that Russian companies are not worse than foreign ones.

“Their products are competitive. Everything that is supplied to us for the cryogenic and turbine-compressor groups. Many have said, which is very pleasing, that they understand they do not only have to produce unique equipment, but they also have to make it competitive,” says Leonid Mikhelson, Chairman of the Board, NOVATEK PJSC.

However, the leaders of the Russian enterprises had to admit that sometimes they have to break stereotypes in order to get an order. And to prove that we are not worse and, in some aspects, are even better than foreign counterparts.  

“Well, initially we had to prove that we are not inferior in anything. In some way it was the most important and the most difficult thing. LNG seemed to be a new industry in Russia, and it was expected to be extremely complex and difficult. But, fortunately, the same Cryogenmash supplies cryogenic systems to both space and nuclear facilities. Therefore, in terms of standards, we quickly managed to dispel the doubts about the quality and features of our equipment,” says Mikhail Smirnov, General Director, OMZ-Engineering JSC.

However, to produce high quality products Russian companies do need state support. It does not have to be financial support. For example, industrialists complain on the "white spots" in certification and standardization of equipment production process for LNG facilities.

Here, in Sabetta, business representatives requested the government to provide support to enterprises producing equipment for Yamal LNG. For example, to increase funding of a roadmap.

The roadmap was developed by the government to help Russian companies produce equipment for LNG projects domestically. Financing amounts to three billion roubles. The meeting in Sabetta was held with the participation of Deputy Prime Minister Dmitry Kozak and heads of Russian companies. Leonid Mikhelson, the head of NOVATEK, noted that this amount would not be sufficient.  In his turn, Deputy Prime Minister Dmitry Kozak, in an interview with journalists, said that the government might increase funding and would stimulate production of domestic equipment for LNG plants.

“If this money is not enough for the implementation of the project, of course, there is always an opportunity to review and to redistribute resources from other less important goals. We aim to introduce the technologies we do not have now on the territory of the Russian Federation. Those 90-95% of the equipment purchased via importing, so that this equipment is produced in Russia. There are appropriate methods of state support. Through tax preferences, through direct subsidies from the federal budget,” says Dmitry Kozak, Deputy Prime Minister, Russian Federation Government.

Another large-scale project has been launched by NOVATEK. It is Arctic LNG 2 with the capacity of over 19 million tons. It will use innovative technologies too. In total, it is planned to increase LNG production to 70 million tons by 2030 and involve more than 800 Russian enterprises. That means there will be dozens of thousands of new jobs across the country, which will result in economic growth.

“We are going to build not three, but at least six lines in total. This will give 1.5% growth of the country's GDP in the next 10 years,” says Leonid Mikhelson, Chairman of the Board, NOVATEK PJSC.

“This is a stunning result because this project has a very narrow niche and it is realized by one company only,” says Dmitry Kozak, Deputy Prime Minister, Russian Federation Government.

However, our country will have to prove its competitiveness on the global LNG market. Russia’s main advantage is low LNG costs.  It is possible to reduce costs with the help of innovations and domestic production of the equipment. Therefore, today there are more and more discussions on the most efficient use of Russian domestic industries.