Russia to build controversial artificial islands in arctic for gas industry

Russia plans to build four artificial islands in the arctic Barents Sea to serve the natural gas industry, though analysts are puzzled by the location as it’s far from a gas field, while environmentalists warn of pollution dangers.

Prime Minister Dmitry Medvedev signed an agreement on June 17 to build the islands in Kola Bay of the Barents Sea at an estimated cost of $420 million. They are expected to come into use from 2020

The islands will be part of the grand project to build the liquefied natural gas production facilities Arctic LNG 1 and Arctic LNG 2 that will utilize the natural gas in the Gydan deposit in the Gulf of Ob, a bay in the Kara Sea.

The construction will be carried out by OOO Kola Wharf, a subsidiary of OAO Novatek, Russia’s No.2 gas company after Gazprom. Novatek plans to commission its LNG factory around 2022 to 2025, which will have an annual capacity of 15 to 16.5 million metric tons of LNG.

Authorities didn’t explain why the site for the islands and LNG facilities was chosen to be so far away from the feedstock gas deposit. It was expected that LNG plants would be built on the Kola Bay coast at a site next to the village of Belokamenka.

“It’s not altogether clear at this point exactly which facilities will be allocated on these man-made islands or what the technical purpose of the islands is in the first place,” Igor Yushkov, a senior analyst at the National Energy Security Fund, said in an interview.

“Novatek has not given an explanation on this score. As a rule, such facilities are not built on artificial islands.”

Building LNG plants in such pristine areas has also sparked concerns among ecologists.

“This is potentially dangerous for our environment,” said Vladimir Chuprov, head of Greenpeace Russia’s energy department.

“Any industrial object in an undeveloped, natural territory, especially one as sensitive as an arctic shelf, will disturb the ecosystem. It’s just a case of seeing how big this disturbance could become,” Chuprov said in an interview.

In 2014, Novatek received the right to export LNG from the Gydan peninsula in the Kara Sea. According to the company’s documents, it estimates that the cost of developing at least the first phase of the LNG facility would be in the region of $10 billion.

The deposits providing feedstock for the LNG plant hold 1.2 trillion cubic meters of gas and 50.5 million tons of liquid hydrocarbons, according to Novatek estimates on the probable and potential reserves.

21