Western sanctions left no choice for Russian liquefied natural gas (LNG) producers. The process of import substitution in this sphere needs to be accelerated dramatically, both in small-tonnage and in medium- and large-tonnage projects, where the backlog of domestic companies from colleagues from abroad is especially large.

Some experts believe that import substitution in large-tonnage LNG production, according to the most optimistic forecasts, will take minimum one year.
 

"Babies" took the lead

The future of small-tonnage LNG projects in Russia, despite the current difficult geopolitical situation, does not cause much concern among experts. Back in August 2021, according to the head of the Ministry of Industry and Trade of the Russian Federation Denis Manturov, the level of localization of equipment in the sphere of small-scale LNG exceeded 60%.

“The prospects in this area are not so bad,” says Vladimir Voronov, Associate Professor of the Faculty of Energy and Environmental Technologies at ITMO St. Petersburg University. - It is possible to replace foreign equipment that has fallen under sanctions within three months – a maximum of one year. There are domestic developments, Chinese counterparts. The equipment is not very bulk, we can organize the production of even some large blocks in a very short time. Russian enterprises have relevant experience, but until recently there were not a large number of orders. A lot was coming from abroad."

Among the enterprises that are ready for localization for small-tonnage LNG, Vladimir Voronov noted NPO Geliimash, which is actively working with Gazprom. Dozens of well-known Russian companies, including Severstal, United Metallurgical Company, REP Holding, Cryogenmash, and many others, have joined the production of equipment for LNG, both small and large-tonnage, in recent years.
 

At the same time, the quality of Russian analogues does not cause any particular complaints. “Russian equipment is quite competitive, but it is more expensive to manufacture and is not yet produced in the volume that is required,” said Sergey Ivanov, executive director of the National LNG Association.

Gazprom LNG Technologies, which develops small-tonnage projects (Kanyusyata in the Perm Territory and others), also noted good performance of locally produced equipment. In terms of price and quality characteristics, it is at a decent level and competes with both Western and Asian models. Perhaps the fact is that some Russian plants have focused on orders specifically for small-tonnage LNG.

“Since the early 1990s, Russian companies have been developing and manufacturing cryogenic technologies and equipment for small LNG plants. For many of them (JSC Gazholodtekhnika, JSC NPO Geliymash), this direction has become a strategic one,” the company stressed.

Today, the LNG production technology is optimized for the design of small-scale plants with a capacity of 0.75 to 20 tons per hour. At the same time, a combination of production cycles of different tonnage is allowed, Gazprom LNG Technologies said. This allows the system to work more efficiently.

But even a high degree of localization of equipment in small-tonnage projects is no reason to relax, reminded Vladimir Voronov. Western models are still used in technological chains here, for which there is no equivalent Russian or Chinese replacement. “Not yet,” the expert reassured.
 

"Large-tonnage" dependence

As for the medium-tonnage and especially large-tonnage projects, it is much more difficult. All major projects, such as Yamal LNG and Arctic LNG 2 of NOVATEK and its foreign partners, or the Complex for the Processing of Ethane Gas (CEG) and the Production of Liquefied Natural Gas (LNG) in Ust-Luga of Gazprom ”, “RusGazDobychi” and “RusKhimAlliance” are critically dependent on imported equipment. According to Vladimir Voronov, most of the problems are associated with the production of heat exchangers and special compressor equipment for large-capacity projects in Russia. It is a very high technology product. Large companies are ready to overpay for Western models, because the quality of Russian ones does not work for them, or they simply do not exist.

“In large-tonnage LNG projects, we are 10–15 years behind Western countries,” said Vladimir Voronov. — Our Western colleagues began to actively develop this direction at the end of the last century. We built the first plant only in 2009. We didn't have time to improve technology. That’s why we have not achieved great success in this sphere, in contrast to small-tonnage LNG. Gazprom uses the technologies of the German company Linde, NOVATEK also uses Western models as the main equipment, and its own technology, the Arctic Cascade, failed to deliver upon expectations.”

However, the good news, according to Vladimir Voronov, is that Russian companies are not standing still.

“Everything related to additional equipment for large-tonnage LNG: tanks, pipeline and shut-off and control valves, piping — Russian enterprises are already producing. OKBM Afrikantov (Nizhny Novgorod) even began to produce large-capacity pumps,” the expert noted.

Another example of import substitution in this sphere was the production of pipeline fittings in Chelyabinsk. In February 2022, KONAR-Orion successfully tested the DN400 axisymmetric check valve designed for the Arctic LNG 2 project of NOVATEK. However, here it wasn’t without foreign technologies either.
 

In large-tonnage LNG projects, we are 10-15 years behind Western countries

“A significant contribution to the project was made by the technological partner of KONAR, the Italian manufacturer of pipeline valves Orion S.p.A. Thanks to its experience and competencies, mastering the unique cryogenic testing technique took only a month,” said the Chelyabinsk industrialists.

Experts agree that there is no alternative to import substitution in large-capacity LNG. Sergei Ivanov, Executive Director of the National LNG Association, called this process vital. According to him, it is necessary to pay special attention to gas turbine units for LNG, which are now produced in single copies. Compressors, cryogenic tanks, cryopumps and cryofittings of Russian production are also needed.

However, today it is very difficult to predict how long this process will take. In Vladimir Voronov’s opinion, according to the most optimistic estimates, import substitution in large-capacity LNG will take minimum one year. The reason is the lack of experience in the production of such complex and science-intensive units as heat exchangers and compressors.
 

Risks and prospects

According to experts, western sanctions, on the one hand, accelerated import substitution in the industry, and on the other hand, brought additional risks. In particular, the risks associated with the fact that Western companies leaving the Russian market may revoke licenses for their technologies.

“If this happens, there will be problems with the implementation of new projects using foreign technologies,” said Vladimir Voronov. - It will be necessary to urgently look for analogues. This can lead to a revision of the entire project, because it was tied to a specific technology, a waste of time and money.”

The second area that sanctions can hit is the operation of LNG facilities and engineering.

“Large-capacity projects require highly qualified maintenance, timely scheduled and scheduled preventive repairs,” said Vladimir Voronov. “In addition, today we are acutely aware of the shortage of personnel in the industry who can work on such complex facilities. This is the third direction for risks. When two hundred foreign specialists left one of the major LNG projects in Russia, it turned out that there was no one to replace them. Therefore, we urgently need to train engineers for LNG.”

“Clearly, at some point we will see a slowdown in the implementation of LNG projects,” Sergey Ivanov agrees with his colleague. — But those projects that have already been launched continue to work. I really hope that Western sanctions will help the development of Russian enterprises producing LNG equipment.”

Of course, in order to resist sanctions, enterprises will need additional support from the state, which, however, has been quite serious until recently. In addition, the Russian LNG market, according to Vladimir Voronov, can be strengthened by new players from private business if the state allows them to participate in large projects on an equal footing with monopolists: Gazprom and NOVATEK.
 

Scientific potential

In the present circumstances, it is necessary to speed up their development not only for Russian manufacturers of LNG equipment, but also for scientific schools working in the industry, experts believe. Without a serious scientific base, import substitution in LNG projects will not be effective.

Vladimir Voronov headed the LNG center established at the St. Petersburg Mining University (SPGU) several years ago. And, according to him, it took a lot of time for this structure to finally appear in the university.

 “Perhaps our lagging behind in LNG technologies is due to the fact that in the 2010s we were not very active in training personnel for the industry,” he says. - The flywheel connected with new programs for students interested in the topic of LNG has been spinning for a very long time. It took not a year or two to create the center. And if it were not for the support of the rector of the university, Vladimir Litvinenko, it is not known whether this project would have been realized. Unfortunately, the center did not work at full capacity and did not produce its specialists. My students studied under specialized programs at the Mining University and ITMO. By the way, many of them successfully work in companies such as Gazprom LNG Technologies.

However, interest in LNG technologies in universities is still growing. At the Department of Transport and Storage of Oil and Gas of St. Petersburg Mining University, research is currently being performed in the sphere of storage of liquefied natural gas. Scientists have developed a method for utilizing boil-off gas discharged from storage facilities using a special ejector that can replace a compressor unit.

According to Andrey Shchipachev, head of the Department of Transportation and Storage of Oil and Gas at St. Petersburg State University, this system helps to prevent a carbon footprint, reduces energy, capital and operating costs that arise during using a compressor.

 

Source: Energy and Industry of Russia