Kaliningrad Now Siege-Proof! Breakthrough LNG Terminal Project Means Gas Won’t Be Held Hostage!

On January 8th in Kaliningrad, a terminal receiving gas from a floating storage unit was put into operation. In a plain language, earlier, Kaliningrad Oblast received gas only via gas pipelines which were in territories belonging to other states. There's now an alternative which doesn't depend on anything.

On January 8th in Kaliningrad, a terminal receiving gas from a floating storage unit was put into operation. In a plain language, earlier, Kaliningrad Oblast received gas only via gas pipelines which were in territories belonging to other states. There's now an alternative which doesn't depend on anything. It's a breakthrough project, the first of its kind in Russia. Vladimir Putin personally oversaw the launch.

Gas was usually sent to Kaliningrad Oblast through Lithuania. As we know, this country, under its current authorities, is always among the first to launch anti-Russian initiatives. Of course, Russia couldn't allow the gas supply of the entire region to be carried out along one route. Now, there's an alternative.

 

Cameras installed on drones captured amazing footage. A special gas terminal was built in the sea and was surrounded by a breakwater. The giant floating regasification unit Marshal Vasilevskiy is moored at it. Liquified gas transported by sea will be transformed from a liquid to a gaseous state here. They'll be able to provide all of Kaliningrad Oblast with gas.

Vladimir Putin: "It eliminates all of the transit risks".

Lithuanian channels made detailed reports on this event because it has a direct bearing on the republic. Earlier, gas supplies to Kaliningrad Oblast were carried out only through Lithuania. It was substantial money for the Lithuanian gas operator.

"In the first six months of the previous year, Amber Grid got 5 million euros for the transit of gas to Latvia and Kaliningrad. It's a fifth of its profits".

Now, Russia has provided its Western region with an alternative route and made it clear that it can do without Lithuania’s transit services if anything happens.

Alexey Miller, CEO of Gazprom: "The diagram shows that the gas supply system through the Minsk-Vilnius-Kaunas-Kaliningrad gas pipeline has been completely shut off. And gas to Kaliningrad Oblast is now being supplied entirely through the receiving sea terminal".

In recent years, the EU authorities have decided to include the Baltic states in its energy system, although they historically belong to the Russian energy system. They'll spend a lot of taxpayers' money, but, according to Putin, it's their own business. Kaliningrad Oblast's energy system now doesn't depend on any of the neighbors.

Vladimir Putin: "It's fully autonomous".

So, when Gazprom specialists were leaving after the end of the ceremony, they discussed not only the successful video link.

- We did it.

- That's it! Good job!

Alexey Miller, the CEO of Gazprom, is now live with our studio from Saint Petersburg.

INTERVIEW

- Greetings, Mr. Miller

Alexey Miller, the CEO of Gazprom: Hello.

- As I see, the venue for our interview isn't random. Is that the Lakhta Center behind you?

- Yes, it's the new Gazprom headquarters. At 1,515 feet tall, it's the tallest skyscraper in Europe, It looks impressive.

- Mr. Miller, why is what happened in Kaliningrad is so important? Why does it have geopolitical, economic, and probably historic importance?

- You know, first of all, we should say that any transit risk is more than zero. Especially when we transport gas from Russia to Russia through the territory of a NATO country. That's why Russian President Vladimir Putin set a task to make the risks of transit through Lithuania equal zero. That is to create a totally independent, guaranteed, reliable route to supply gas to Kaliningrad Oblast. This task has been fulfilled. We've created reserve capacities and built a receiving terminal to receive liquified natural gas by sea. These capacities allow both the current and prospective needs of Kaliningrad Oblast to be fully met.

Of course, in the gas sector, there are certain approaches which allow the reduction of transit risks. For example, gas transit agreements and gas supply agreements allow a transit country to do that. But when Lithuania built its own terminal to receive liquified natural gas, that balance of interests was upset. Lithuania strengthened its transit position, its negotiating position with respect to the transit agreement. Lithuania has two routes for gas supply — by land and by sea. There are two ways to supply gas — pipeline gas and liquified natural gas. This imbalance has been fully eliminated. We don't know if Lithuania will further meet its gas needs using the terminal to receive liquified natural gas. But we're now sure to be able to provide Kaliningrad Oblast with liquified natural gas by sea.

I'd like to note that it's also very important that with providing autonomous gas supplies, we solved the issue of the autonomy of the generation of electric power in Kaliningrad Oblast. The electric power industry is the main consumer of gas in Kaliningrad Oblast. Undoubtedly, today, the energy security of Kaliningrad Oblast has reached a fundamentally new level. This is the strategic aspect.

- As I understand, the name of the vessel Marshal Vasilevskiy wasn't chosen at random. It has some big geopolitical and historical subtext.

- Undoubtedly, the name wasn't chosen at random. Marshal Vasilevskiy is a cult figure in Kaliningrad and Kaliningrad Oblast. At the beginning of 1945, he was appointed the commander of the 3rd Belorussian Front. Under his personal supervision, the operation to liberate Königsberg (modern Kaliningrad) from fascist troops was carried out. Germans said that Königsberg was an absolutely impregnable bastion. It took Soviet troops three days to seize that impregnable bastion. After the Great Patriotic War, Stalin appointed Vasilevskiy as Minister of the Armed Forces of the USSR. He was twice given the title Hero of the Soviet Union. He was awarded eight Orders of Lenin and two Orders of Victory. He was a legendary personality.

- Alexey Borisovich, how hard was it to build the breakwater? Was it a unique engineering operation? How new are the whole complex and the cycle for Russia?

- You know, the construction of the breakwater was indeed difficult. It was difficult simply because the Baltic Sea is famous for its strong storms, and the period of construction wasn't an exception. During the construction of the breakwater and the receiving terminal, in the autumn of 2017, there was such a strong storm in the Baltic Sea near Kaliningrad one that takes place only once every fifty years. I can say that in the course of commissioning and start-up, we had to deal with storms, and wave heights sometimes reached 20 feet. As for the breakwater and the receiving terminal, they're absolutely guaranteed to ensure safe operation of the vessel which will transport liquified natural gas to Kaliningrad Oblast and the regasification unit.

- How often this vessel is supposed to moor the unit? Could this technology lead to higher prices for consumers in Kaliningrad Oblast?

- You know, as for the volume, the volume of gas transported through the terminal, at the current level of consumption, it could be 91-95 billion cubic feet of gas. If the need increases, producing 466 million cubic feet of gas per day, we can reach a level of 130 billion cubic feet of gas. But this is the maximum volume necessary for Kaliningrad Oblast. On the other hand, it's fully covered by the autonomous gas supply.

Undoubtedly, liquified natural gas by sea at such a distance is more expensive than pipeline gas. And at the ceremony for putting the receiving terminal into operation, Russian President Vladimir Putin said that this price difference will definitely not be paid by the gas consumers in Kaliningrad Oblast. This assignment has been already given to the Russian government. Our project is complex. As part of the complex project for autonomous gas supply to Kaliningrad Oblast, we're constructing an LNG plant near the Portovaya compressor station where the Nord Stream 1 pipeline begins. The plant will be built by 2019. Undoubtedly, the fact that we have our own LNG and the complex nature of the project, given that we're building and developing an underground gas storage facility in Kaliningrad, makes our project much more competitive in economic terms, compared to similar projects in other countries. When Kaliningrad Oblast doesn't need liquified natural gas, we have our own LNG plant in Russia, we'll just sell it on the market. That's why of our complex project is the most economically sound out of similar projects.

- And UGSF stands for an underground gas storage facility, am I correct?

- In 2013, on the instruction of the president, we launched the first stage of the project for the construction of an underground gas storage facility in Kaliningrad Oblast and are consistently increasing active capacities of the Kaliningrad UGSF. This storage facility is unique. It was made in salt caverns and undoubtedly has an advantage over other types of underground storage facilities because when storing gas in salt caverns, we can promptly switch from pumping out to pumping in during the autumn-winter period. Thus, during the autumn-winter period, we can maintain a very large and necessary volume of working gas in the underground storage facility. By 2025, we plan to significantly increase the storage capacity. I can say that undoubtedly, higher gas consumption in Kaliningrad Oblast means new opportunities for the Kaliningrad UGSF. It relates to pipeline supplies and supplies through the LNG receiving terminal.

- Mr. Miller, let me ask you a very brief concluding question. Will the technology that is now established and seems to be very successful for Kaliningrad be used anywhere else?

- You know, the floating regasification unit is the only one in Russia as of today. It can navigate in any zone. The vessel is of Arctic Class 4. Of course, if there is a task, and to properly set a task is half the battle, and if there is a task to ensure autonomous gas supply to some region, we'll fulfill that task.