Russian Ports to give preference to LPG

Gazprom has consolidated its production assets for the implementation of LPG (liquefied petroleum gas) in Russia through its subsidiary Gazenergoset. According to expectations this will contribute to the development of production of this type of gas in Russia. At the time of struggle for more efficient use of associated gas, about which the first person in the country repeatedly made remarks, as well as the appearance in the world of technology, enabling greater use of LPG in the economy and everyday life, experts predict a rise of investment and the consruction of the marine transshipment facilities in the Russian ports.

Incidental income

Let us remind that the LPG is produced mainly from associated petroleum gas (APG), burned in flares in Russia for the most part. In this regard, we note that the January 8, 2009 Government of Russia issued a decree, which identified the target of combustion of associated petroleum gas (APG) in flares in 2012 and following years of not more than 5% of the volume of produced associated gas. The higher costs for above-limit flaring of associated gas is planned to be launched since January 1, 2012. The level of utilization of associated gas in the world, in average is 95%, and in Russia - not more than 30%, so there is growth potential. According to industry experts, one of the most effective ways of utilization of associated gas is to include it into the system of Gazprom.
The world market of LPG is also growing. Arthur Minasov, CEO of Safinat An-Najaat Petroleum Company Ltd (manages the terminal "Maktren-Nafta") told in his interview with PortNews IAA that total growth of consumers demand for LPG is fixed on external markets, it is not high - 2-3% per year, but during the past few years stable. "With the same rate the market of consumption of LPG is going to developed in the medium and long term" - expert predicts. Relatively small growth in consumption can be expected in post-crisis period.

"In our view, the growth rate of consumption of LPG can significantly affect only the introduction of new fuels on the basis of this gas into the air and car transportations. The test trials, for example, of new fuels (higher quality and less expensive than now) for aircrafts are carried out in the U.S. "- says Arthur Minasov.
As Dmitry Baranov, leading expert of UK Finam Management, commented to PortNews IAA, in the medium and long-term demand for liquefied petroleum gas will increase in the world, due to the desire of oil companies to get more revenue from the exploitation of its resources and the emergence of new, more efficient technologies that allow greater use of LPG in various sectors of the economy.

Thus, increase of production of LPG in Russia can be expected, including for export. In the meantime, there is only one terminal for handling of LPG - Maktren-Nafta in the port of Temryuk.

In addition, company Tamanneftegaz is building facilities for transshipment of LPG for export with capacity of 1 million tons per year in the port of Taman. According to schedule the first stage of it will be put into operation in II quarter of 2010.

In the North-West Sibur plans to build a complex for transshipment of liquefied petroleum gas and light oil in the port of Ust-Luga to export gas to Europe. In the IV quarter of 2012 it is planned to complete construction and to put the facilities into operation. Planned annual turnover - up to 1.5 million tons of LPG per year.

Also, at the end of last year construction of LPG terminal in the port of Primorsk was considered to be possible, its parameters were not specified.

As Arthur Minasov, Vice President of logistics investment group Safinat (owns the terminal Maktren-Nafta) commented in an interview with PortNews IAA, the benefits of these ports lies in their characteristics reflecting proximity to the export transport routes, geographical position, approach channels, development of access roads and other factors.
Characteristics of operation of LPG terminals in the segment of infrastructural development are reflected in the characteristics of operating terminal Maktren-Nafta. Thus, in the first phase of the terminal construction the following steps are includes: bilateral railway overpass for simultaneous discharge of 20 tanks, tank farm with a capacity of 6 thousand cubic meters, pipeline (400 m) for product transportation to the berth.

Movable flush devices are designed for work with tanks of different capacity 54, 75, 85 cu. m. Effecient loading speed - up to 400 tons per hour. Two schemes of loading have been implemented: from tank farm and in a straight scheme "tank--ship", the possibility of the reverse is also provided (pumping from vessel into the tank).

The harbor facilities of the complex and the canal can accommodate vessels with a draft of 4.6 – 5 m. Technological time of tanker loading with liquefied gas makes up 8-12 hours. Alongside with technological facilities and equipment, the terminal has its own berth and approach roads. Construction of the complex is carried out in accordance with the federal target program Modernization of transport system of Russia (2002-2010).

Launch of the second construction stage is scheduled for II quarter of 2010, it will increase the storage tanks up to 10 thousand cubic m., and the railway pier in two times.

It is for Government to make decisions

Although economic conditions for investment of LPG terminals in the ports of Russia are quite favorable, the state must solve a number of burning issues. First, the oil must be economically intrested to process associated gas in the LPG. Secondly, domestic stevedoring companies must be charged with transshipment of gas for export in order to ensure equal conditions of competition with neighbors.

"The more similar terminals are put into operation, the more constructive the solution of tariff regulation issues for transportation of raw materials will be. Rates are currently arranged in such a way that the benefits of Russian marine terminals are considerably offset by 40% tariff on exports to the Ukrainian "  said Arthur Minasov.

According to him, the establishment of transshipment capacity of LPG in Russia allows in prospect to turn down the service of export terminals in Ukraine and the Baltic States.

According to Dmitry Baranov, you can expect investment in the development of related infrastructure of transportation of LPG, but not before the moment a system of incentives from the state is established.

"Until this moment, the investment will be made only on the good will of companies expecting additional revenue from the sale and export of LPG. Given that the state set a target not to give up revenue from the export and transit of commodities to neighboring countries, we can expect that the appropriate infrastructure will be established on the territory of Russia, perhaps even with state participation, "- says the analyst.