* Putin sees Yamal LNG project as a priority
* Moscow wants to diversify away from Europe
* Russia looks to Asia as Western sanctions hit
* In Yamal, workers confident project is secure
By Denis Pinchuk
SABETTA, Russia, April 11 On the Arctic tundra
far to the north of Moscow, Russia is charting a course away
from the West and towards Asia.
In Yamal - which in the local Nenets language means "the end
of the earth" - a $27 billion liquefied natural gas (LNG) scheme
is assuming major political as well as economic significance.
The project fits well with a more aggressive eastward push
by Moscow since the United States and European Union imposed
sanctions over its annexation of Crimea from Ukraine last month.
Instead of sending gas by pipeline to long-standing EU
customers, Russia aims to ship LNG from the remote Yamal
peninsula by sea largely to Asian buyers such as China, which
has avoided confronting Moscow since Russian troops took control
Yamal will eventually involve the drilling of more than 200
wells through the permafrost and building facilities to liquefy
the gas. Construction at the port of Sabetta, more than 2,000 km
(1,200 miles) north of Moscow, is well under way.
For those working in Yamal, the Western sanctions seem a
remote threat even though one of the U.S. targets is Gennady
Timchenko, a co-owner of gas producer Novatek which
holds a 60 percent stake in the project. What matters is support
from Russian President Vladimir Putin and foreign investors.
"We are confident. The port and the plant are under the
protection of the president and government," said Vladimir
Voronkin, deputy head of Yamal LNG, standing on what has become
a vast construction site in the frozen tundra.
Voronkin noted that French energy group Total and
China National Petroleum Corp each have 20 percent stakes in
Yamal LNG. "Foreign investors put up money here - why would they
want to lose it?" he asked.
Russia's reserves of Arctic gas are estimated at more than
30 trillion cubic metres and it hopes to convert a quarter of
this into LNG, under a long-term plan to diversify away from the
With the EU and Ukraine discussing ways to cut their
reliance on Russian gas, Moscow has courted its Asian partners
more aggressively, hoping to capitalise on record prices for LNG
in Japan, China and South Korea.
Putin has hailed the Yamal LNG project and wants no expense
spared. Russia now has just one LNG plant, controlled by
state-run top gas producer Gazprom, on the Pacific
island of Sakhalin with an annual capacity of 10 million tonnes.
Companies, including Sakhalin LNG shareholder Shell
, have urged Russia to speed expansion of its LNG
facilities or risk missing the peak in gas prices.
ELUSIVE CHINA DEAL
The head of state-owned energy company Rosneft, Igor Sechin,
visited Asia last month and deputy prime minister Arkady
Dvorkovich was quoted this week as saying from Beijing that
talks on a gas deal with China had made some progress.
A deal between Gazprom and China has been in the works for
at least 10 years. If one is finally struck, Putin could hold
this up as proof that Western attempts to isolate Russia are
destined to fail.
Brussels has imposed visa bans and asset freezes on several
Russian officials over Crimea but it was the punitive measures
from Washington that affected Timchenko, believed to be a
long-term acquaintance of the Russian president.
Timchenko reported he had sold his nearly 50 percent stake
in Gunvor, the world's fourth-largest oil trader, hours after
his place on the U.S. blacklist was announced. But he has kept
his 23 percent shareholding in Novatek.
At Sabetta, a site worker who gave his name only as Viktor
said U.S. threats would not stop or slow the project.
"Do you think the government's seats are taken by fools, not
knowing what to do? Do you know how interested Putin is in this
project?" said Viktor, who is helping to build orange and blue
pre-fabricated accommodation for thousands of workers due to
move to Sabetta for at least some months of the year.
"Whatever the U.S. might say, all will be in place here," he
said, showing newly painted rooms.
More than 10,000 people will eventually work at the project,
producing 16.5 million tonnes of super-cooled gas by the end of
this decade - enough to supply the world's fastest-growing
energy consumer, China, for around a year.
Russia plans to double that over the next decade as
additional fields start production.
BREAKING THE ICE
But first they must ensure LNG carriers can use the port at
Sabetta all year round, even when it is ice-bound. This will
involve using compressors to pump air under the ice, ensuring it
breaks up more easily as ships push through.
The Arctic cold means that ships can travel from Yamal to
the Pacific Ocean via the Bering strait only during five to
seven months a year.
For the rest of the year, the LNG can reach the Pacific the
long way round via the Suez canal but that more than doubles the
distance to Shanghai, raising transport costs.
Novatek has also agreed to sell some of its LNG to Spain.
For now the port at Sabetta, built last year and this, is
used for bringing in food, machinery, building material and
firewood for saunas for the workmen.
Five thousand are employed at Sabetta, working for 45 days
and then breaking for the same number and earning wages that
range from 70,000 to 100,000 roubles a month - much more than
the Russian average of 30,000 ($850).
"It's pretty comfortable when you are working like a dog for
a month and a half and then having a rest for the same amount of
time," said Viktor. "We will build it whatever."
($1 = 35.5008 Russian Roubles)
(editing by Elizabeth Piper and David Stamp)