(OilPrice) – Russian President Vladimir Putin has inaugurated a $27 billion liquefied natural gas (LNG) plant on the Yamal Peninsula above the Arctic Circle, part of a joint project of Russian, French, and Chinese companies.
Putin watched at the port of Sabetta as the first gas shipment was loaded onto an ice-breaking tanker.
The plant, which began operations on December 5, is a joint venture between Russian gas company Novatek, France’s Total, and China’s CNPC.
When completed, the project will include three production facilities with a capacity of 16.5 million tons a year by the start of 2019, as Russia looks to surpass Qatar as the world’s biggest LNG exporter. Initial capacity will be 5.5 million tons a year.
“It is a great day for us,” Putin said at the official ceremony. “It is a large-scale project for Russia.”
Total chairman and CEO Patrick Pouyanne, hailed the facility — at a site some 2,500 kilometers northeast of Moscow and covered by ice most of the year — as a success.
“Together we managed to build from scratch a world-class LNG project in extreme conditions to exploit the vast gas resources of the Yamal peninsula,” he said in a statement.
The project will officially be run by the Yamal LNG company, with 50.1 percent owned by Novatek, 20 percent by Total, 20 percent by CNPC, and 9.9 percent by the Silk Road Fund, a Chinese state-owned investment fund.
Several of Novatek’s subsidiaries are under U.S. financial sanctions, which made it difficult to secure international financing for its part of the project and forcing the company to turn to Chinese partners for funding.
The United States imposed the sanctions as part of its response to Moscow’s activities in Ukraine.
Russia annexed Ukraine’s Crimea region in 2014 and has backed separatists fighting Kyiv’s government forces in a war that has killed more than 10,000 people since it began in April 2014.