Super project： Sino-Russian Arctic natural gas project put into production. Putin personally loaded the ship.

[Observer Network Comprehensive Report] The Sino-Russian major energy cooperation project, the Sino-Russian Yamal LNG project was officially put into production yesterday (8 th). This project is the largest liquefied natural gas project in the world at present. It is located at 71 degrees north latitude, 600 kilometers deep in the Arctic Circle, near the extremely cold zone of the Arctic Ocean, and the lowest temperature can reach MINUS 50 degrees Celsius.

At 6: 30 pm local time on December 8, Russian President Vladimir Putin personally attended the first LNG shipment celebration of Yamal project. Putin said, "At the beginning of the project, many people made a long list of’ the project can’t be successful’. Yes, the project once had many risks, but you can see that it has been successful now. This is a major moment for the energy industry, Arctic development, and even the northern waterway. "

This project is another super project. Since it was launched in 2014, China elements have been displayed everywhere. In the construction of the project, China enterprises have undertaken 85% of the total module construction, the construction of 7 ships out of more than 30 transport ships (including 44,500 tons of Arc7 ice-breaking condensate carrier and heavy-duty deck carrier, etc.), and the operation of 14 ships out of 15 LNG carriers, etc. A total of 45 China manufacturers have provided more than 100 products for the project.

In addition, the Russian side suffered from western sanctions led by the United States because of the Crimea issue, which also caused the project with a total investment of 27 billion US dollars to be trapped in financial problems. A number of banks in China provided loans worth $12 billion in euros and RMB to replace the original western financing. Silk Road Fund also invested $1.4 billion to acquire 9.9% of the shares of the project, which finally solved the problem satisfactorily.

Putin personally presses the loading button (vision china map)

With Putin pressing the loading button, the LNG produced by the first production line of the project began to be injected into the 80,000-ton LNG icebreaker docked at Sabbetta Port. The natural gas and condensate products produced by this project will be transported to China via the Bering Strait via the "Northern Channel", which takes only about 15 days, saving nearly 20 days compared with the traditional route through the Suez Canal via the Mediterranean.

Nur Bai Keli, director of China Energy Bureau, Fan Xianrong, ambassador to Russia, Wang Dongjin, deputy general manager of the group company and member of the party group, Wang Yanzhi, general manager of Silk Road Fund, and Zheng Zhijie, president of China Development Bank also attended the ceremony.

Observer Network reported in November 2015 that China and Russia were reaching the main terms of the agreement on the Yamal LNG Project in the Arctic. Today, the project has overcome many difficulties and is finally close to fruition.

In November 2015, Observer reported that Zhang Gaoli and Devall Covic signed the Minutes of the Twelfth Meeting of the China-Russia Energy Cooperation Committee.

Russia has resources and China has a market.

Yamal Peninsula has the largest natural gas reserves in Russia and the world, which is even higher than that in other parts of Obi Bay. It is estimated that the gas reservoir is as high as 55 trillion cubic meters (tcm), which is described by Gazprom as "Russia’s strategic oil and gas reserve area".

Beijing Broadcasting Network reported on December 9 that at around 8: 40 pm Beijing time on the 8th, the Sino-Russian Yamal LNG project, a major energy cooperation project between China and Russia, was officially put into production. The project is jointly implemented by China Petroleum and Natural Gas Group, China Silk Road Fund, Novatec and Total. The project is located near Sabetta Town, Yamal Peninsula, near Obi Bay, and the natural gas exploration and development license is valid until 2045.

Site prospect of Yamal project

Yamal project integrates natural gas and condensate oil exploitation, natural gas treatment, liquefied natural gas (LNG) manufacturing and sales, and shipping, and is jointly developed by Novatec, China Oil and Gas Group, Total and China Silk Road Fund. The recoverable reserves of natural gas reach 1.3 trillion cubic meters and the recoverable reserves of condensate oil reach 60 million tons; Three LNG production lines with an annual output of 5.5 million tons will be built in the project, which can produce 16.5 million tons (25 billion cubic meters) of LNG and 1 million tons of condensate oil every year after completion. According to the contract, 54% of the project’s output will be sold to the Asian market and the rest to Europe.

Jiang Qi, general manager of CNPC International Russia Company, said that China has a market and Russia has sufficient resources, and the cooperation between them is a win-win move. China’s market needs to import resources, and Russia’s resources need to find markets, so Sino-Russian oil and gas cooperation is a natural complement.

Jiang Qi said that after the completion of this project, China can get 4 million tons of liquefied gas from this project every year, which will provide a foundation for clean energy supply in our country.

Russian Energy Minister Novak said that strategic cooperation between China and Russia in the energy field is taking shape.

Novak said that 80% of the project has been completed and 95% of the first phase of the project has been completed. In the next two months, the operation of the first phase of the project will start, and the first liquefied natural gas will be produced. I believe that the implementation of this project has further promoted the cooperation between our countries and our companies.

As the first industrial chain cooperation project between China and Russia in the Arctic Circle, Yamal project will not only promote the development of Russian energy industry and border areas, but also enrich China’s clean energy supply and accelerate the optimization of China’s energy structure.

Sabbetta Port Wharf (Dagong Network Map)

China made the Arctic outbursts and broke all kinds of monopolies.

"Yamal" means "the end of the earth" in the local Nenets language. It is the construction of the largest LNG project with the highest latitude in the world that has broken the loneliness of "the end of the land".

China Petroleum News Center previously reported that in 2016, the construction of Yamal LNG project was in full swing. Because the project is located in the North Pole and the construction environment is harsh, in order to reduce the construction cost, the main projects adopt the modular construction method, that is, the large equipment needed for the project is processed in other places and formed into standard units, and then transported to the project site for assembly. At present, nearly 400 modules required by the project are mostly built by enterprises in China.

At the same time, Chinese units also participated in geological research, drilling rig manufacturing, module construction, engineering supervision, marine logistics, material supply, shipbuilding, LNG procurement and other links involving the LNG value chain. China’s full participation has provided irreplaceable strong support for the smooth start, rapid progress and response to sanctions.

In March 2016, the first domestic "Aurora" polar drilling rig was installed in Sabbetta Oilfield of Yamal Project.

CCTV News reported on the 9th that Liu Guizhou, deputy chief economist of PetroChina Russian Company, said that we have to drill a total of 208 wells in this gas field, and now the 99th well is being drilled. You can see that the Christmas tree has just finished drilling a well, and the derrick you see is an Arctic drilling rig produced by Honghua Company in China.

Arctic drilling rig should have the function of cold resistance and heat preservation, and can work continuously in the environment of low temperature of MINUS 50 degrees and strong wind above 12 levels. The first domestic polar drilling rig "Aurora" broke the technological monopoly of Russia, the United States and Canada, and successfully entered the Russian Arctic market.

Wang Yonghua, chief geologist of CNPC International Yamal Company, said that Honghua drilling rig has completed 11 drilling operations on our platform without any safety accidents, and its toughness is very stable, which has been recognized by drilling contractors and service providers.

In July 2016, three core modules built by Wuchuan Group with a total weight of 7,000 tons were shipped from Qingdao base to Yamal Peninsula.

Yevgeny Kutt, general manager of Yamal LNG project, said that not only the modules are made in China, but also the steel, materials and pipes are made in China, and some pumps are also made in China, including the financial support of our partners. The support from the upstream to the downstream of this project is enormous, and our project actually represents a model of cooperation between China and Russian enterprises.

By training Yamal, China enterprises have realized the leap-forward development from single product to project contracting, from low-end manufacturing to high-end "intelligent" manufacturing, and China manufacturing has become a new business card in the Arctic.

The achievement is brilliant and the process is tortuous.

China Energy Network reported in August this year that after 27 months of fierce competition, CNOOC Engineering had continuously optimized its construction scheme and technology and actively reduced its own cost, and finally won the bid for 36 core process modules, breaking the Asian market pattern in which Korean enterprises monopolized the construction of LNG core modules for a long time.

Challenges follow. For example, the total length of the pipeline laid is 215,000 meters, which is equivalent to the length of the Sixth Ring Road in Beijing. The cable is 3300 kilometers long and can be connected from Beijing to the Arctic Circle. The completed document has more than 7 million pages. There are many kinds and quantities of internal components, which require high precision and complex construction technology, far exceeding similar projects in the industry, and a large number of ultra-high and overweight pressure vessel equipment are also configured in the module.

Not only that, the owner’s drawings and a large number of materials are still seriously lagging behind. Under this severe test, CNOOC Engineering not only became the first contractor in the world to deliver LNG module products on time and with good quality, but also created a new safety record of 38.63 million man-hours without accidents in the world. This is rare in the history of international construction.

Two natural gas compression modules with a length of about 50 meters, a width of 36 meters and a height of 39 meters and a weight of more than 10,000 tons were shipped.

In the above picture, it is the world’s first polar heavy-duty deck carrier "AUDAX" built by Guangzhou Shipyard International that "carries" two big guys over 10 stories high.The total length of the ship is 206.3 meters, which is more than two football fields. The vertical length is 193.8 meters, the profile width is 43 meters, the profile depth is 13.5 meters, the design draft is 7.5 meters, the structural draft is 8 meters, and the design deadweight is 24,500 tons. The ship can work normally in the ultra-low temperature environment of MINUS 50 degrees Celsius, and maintain two knots of speed under the sea condition of 1.5 meters ice thickness.This level has reached the highest ice zone grade Arc7 in Russian specifications.It is higher than the speed of the Chinese star scientific research ship "Snow Dragon" at 1.5 knots to continuously break through the 1.2-meter-thick ice layer.

Welding technology in extremely cold climate is also a big challenge.. Ultra-low temperature carbon steel materials with impact temperature of -50℃ are widely used in the main structure and pipeline of Yamal project. Because the impact toughness value of the materials drops sharply with the decrease of temperature, it is extremely difficult to develop the welding process. Through technical research, CNOOC Engineering has successfully broken through the industrial welding problem of steel serving in -50℃ environment, and the welding construction capacity in "extremely cold environment" has been greatly upgraded.

Besides,Major breakthroughs have been made in the welding of large-diameter stainless steel at ultra-low temperature of -196℃, the welding of 625/825 nickel-based alloy composite pipe, and the welding of dissimilar steel.The efficient welding processes such as automatic flux-cored gas shielded welding and automatic argon arc welding developed by it have tripled the welding efficiency and greatly reduced the labor intensity of welders.

And painting process is also the difficulty of the whole project.. The Yamal project has a total painting area of 1.57 million square meters, which is equivalent to 200 football fields, and the painting workload has reached a new high for the projects undertaken by CNOOC. Low temperature splash prevention coating (CSP) is a unique coating system for LNG core process module. Its main function is to prevent LNG at -196℃ from splashing on steel structures, causing brittle fracture of steel structures and causing loss of personnel and property. The construction technology of this coating is complex and extremely difficult.

At present, only a few countries in the world, such as South Korea, have mastered the construction technology of this coating. The coating technology team of CNOOC Engineering has repeatedly scrutinized, experimented, failed and re-experimented every construction process of CSP, and in just half a year, it has successively overcome many key technologies such as ultra-low temperature construction of CSP coating and mechanized spraying of CSP. Some practical technical innovations, such as map combination reservation and magnetic fixing device, have also greatly improved the construction efficiency.

Referring to the independent research and development of foam glass, Chen Baojie, general manager of Yamal Project, is quite proud.. Yamal is located in the extremely cold zone, so all key equipment and pipelines should be put on special thermal insulation clothes-foam glass. This special material cutting technology has been monopolized by a Singapore company for a long time. The CNOOC engineering team wanted to visit and observe, but they were shut out. "This kind of equipment is our only one in the world, and we can’t show it to you. But we can provide paid services. " However, cutting in Singapore is expensive, and foam glass is fragile, and the transportation process is extremely costly.

What should we do? Chen Baojie said, if you don’t give it to us, we will develop it ourselves! CNOOC Engineering is determined to independently research and develop cutting technology and quickly set up a research group on foam glass cutting machine. Seven members worked hard day and night. Five months later, the world’s first semi-automatic foam glass cutting equipment was born! Compared with manual cutting, the efficiency has been improved by three times. Not to mention, the research group has also developed a set of foam glass typesetting technology, which reduces the material cutting loss from 50% to 28%. This alone will save more than 40 million yuan.

Arc7-class ice-breaking condensate tanker (the first domestic ship started construction in Nansha in December 2016)

China’s financing breaks western sanctions

The Financial Times reported on December 9th that the project was financed by banks in China, with French Total taking a share, and operated by Novatek, Russia’s largest independent natural gas producer, which is a milestone for Russian Arctic natural gas development. The newspaper also commented that this project will break Western sanctions and deepen Sino-Russian energy cooperation, which will further stimulate China’s ambition to become one of the "major players" of natural gas.

According to the report, in 2014, Russia suffered western sanctions for recovering Crimea, the ruble once plummeted, and Novatec was also sanctioned by the United States, which led to financial difficulties for the Yamal project. At that time, Russia tried every means to circumvent the sanctions. First, it converted US dollar financing into euro financing, and then in May 2016, it obtained loans worth 12 billion US dollars from The Export-Import Bank of China and China National Development Bank in euros and RMB to replace western financing. China Silk Road Fund also acquired a 9.9% stake in Yamal Project in March 2016 for about $1.4 billion.

In the whole project operation, the final shareholding structure is: PetroChina shares 20%, Silk Road Fund shares 9.9%, France Total shares 20%, and Russia Novatec Company holds 50.1%.

In September 2014, when the West imposed sanctions on Russia, Zhang Gaoli attended the ceremony of the Siberian gas pipeline project.

The Financial Times said that because western sanctions actually affected the cooperation between Rosneft and ExxonMobil, it was also a subversive victory for French Total. Patrick Pouyanne, CEO of Total, said, "In order to develop natural gas resources in Yamal Peninsula, under extreme conditions, we have built a world-class LNG project from scratch."

Moody’s, a financial rating agency, also described the project as "a symbol of the birth of a world-class LNG giant".

In 2016, the Yamal project successfully closed the project financing, and successfully completed financing through Chinese-funded, Russian-funded and international banks, with a total loan of US$ 17 billion, creating another successful case of international financing.

Driven by the Yamal project, the Sabetta area where the project is located has also developed. The local airport was put into operation in February 2015, and a number of domestic and international routes were opened. As of November 26, 2017, a total of 7523 flights were flown, carrying 701,914 passengers and 9,200 tons of cargo. Sabbetta Ocean Port has built six material unloading berths, which have carried more than 500,000 tons of materials.

According to reports, Saudi Energy Minister Khalid al-Falih also attended the ceremony on the 8th, and an unnamed Saudi company may negotiate with Novatec to build another LNG project near the Yamal project.

Arctic waterway, 20 days less than bypassing Suez Canal.

The construction of Yamal project not only added natural gas to the northern sea in China, but also successfully realized the transportation of the Arctic Ocean through the Arctic waterway, which provided an important fulcrum for the implementation of China’s "Silk Road on Ice" strategy.

Since 2015, more than 60% of all modules of Yamal LNG project have been transported through the northeast Arctic waterway, that is, through the Bering Strait, which has shortened the voyage by at least one-third compared with the traditional waterway through the Suez Canal, shortened the sailing time by nearly half, and greatly reduced the logistics cost.

The "Silk Road on Ice" is a shipping channel that crosses the Arctic Circle and connects the three economic centers of North America, East Asia and Western Europe. During the construction of Yamal project, more than 60% of the modules and parts were transported through the Bering Strait and the northeast Arctic waterway, which took about 16 days on average, saving nearly 20 days compared with the Suez Canal.

Yamal project and schematic diagram of Arctic waterway

In our country, 90% of foreign trade cargo transportation depends on shipping. At present, although there are many ocean routes in China, the routes to Europe are limited, and they are facing various problems such as cost and safety.

Jiang Qi, general manager of China Petroleum Russian Company, said that the Arctic Northeast Passage is the most direct and convenient transportation channel connecting Asia and Europe. If we can make full use of this Arctic waterway, the future economic and trade cooperation between China and Europe will also reduce a lot of logistics costs and improve the economic cooperation between China and Europe.

The data show that once the Arctic northeast waterway is officially opened, the voyage from China’s coastal ports to the east coast of North America is 2000 to 3500 nautical miles shorter than the traditional route of Panama Canal. The distance from the port north of Shanghai to the ports in western Europe, Beihai and Baltic Sea will be 25%-55% shorter than that of traditional routes, and the international trade shipping cost will be saved by 53.3 billion to 127.4 billion US dollars every year.

According to a CCTV reporter’s on-the-spot visit, the Yamal LNG project is located in the high latitude area of the Arctic Circle, and there is an extreme night phenomenon in the local area after entering the winter. The whole project covers an area of 189 hectares, which is as big as 249 football fields. In addition, there are supporting airports and transportation ports, and ships are specially built to adapt to polar transportation conditions.

According to reports, it usually takes 52 months or even 54 months for a large-scale LNG project from the final investment decision to the first production line. However, the Yamal project took 48 months from January 2014 to the first production line, which has become a miracle in the construction of LNG projects.

The staff at the scene told the reporter that the technical modules produced in China were transported here by sea, and the heaviest module exceeded 7,000 tons. Many modules are completed before the schedule, which shortens the whole construction period. Due to the use of high-tech environmental protection technology in the construction, the reporter also photographed the Arctic fox in the project camp, and the Arctic fox obviously still regards it as his home.

Putin came to the Yamal project command center and looked relaxed.

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