Russia: Business Deal Gazprom, Rusgazdobycha and Nipigaz Terminate EPC Contract for Ust-Luga Gas Complex

Gazprom, Rusgazdobycha and Nipigaz have undertaken the move in order to optimize the project costs. The complex is a vital project for the gas processing and chemical cluster that is being developed in the region.

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Moscow/Russia – Gazprom, Rusgazdobycha and Nipigaz have recently decided to terminate the business relationship under the EPC contract for the creation of the Gas Processing Complex as part of the Complex for processing ethane-containing gas (GPC of CPECG) near Ust-Luga, Russia. The purpose of the decision is to optimize the project costs.

The EPC contract was signed for a cycle of operations to create gas processing and off-site facilities at the complex, including the preparation of the working documentation, delivery of equipment & materials, execution of construction & installation and start-up & commissioning works, and integration services for the complex and its off-site facilities. A new contractor for these works will be appointed in the near future.

The replacement of the contractor will not have any influence on the project implementation schedule. All works for the creation of the CPECG are carried out as planned.

Background

Gazprom and Rusgazdobycha are implementing the project for a natural gas processing and liquefaction complex near the settlement of Ust-Luga, with the Ruskhimalyans special-purpose company as the project operator. It is the anchor project of the major gas processing and chemical cluster that is being established in the region.

The complex will have the largest capacity in Russia in terms of gas processing and will be the largest in northwestern Europe in terms of liquefied natural gas (LNG) production (13 million tons per year). In addition to LNG, its commercial products will include ethane fraction, liquefied petroleum gases, and pentane-hexane fraction.

Rusgazdobycha will be responsible for the construction of the technically affiliated gas chemical facility that will process ethane generated by the complex and produce up to 3 million tons of various polyethylene grades.

Under the existing long-term contracts, the CPECG will be provided with raw materials for not less than 20 years.

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