Russia's Gazprom begins building Baltic Sea gas processing plant

MOSCOW, May 21 (Reuters) - Russian gas producer Gazprom said on Friday it has started construction of a massive gas processing complex on the shores of the Baltic Sea jointly with its partner RusGazDobycha.

The new complex in the region of the port of Ust-Luga is part of Gazprom’s strategy to shift focus to processing and will combine a gas processing plant and a gas chemical complex.

It is poised to become Russia’s largest gas processing plant and one of the world’s largest in terms of production volumes.

Russian Deputy Prime Minister Alexander Novak, speaking during the televised ceremony to mark the start of construction, said the complex will help Russia gain a greater share of the global market for LNG and gas processing.

Russia plans to triple LNG production to some 140 million tonnes annually by 2035 and raise its global LNG market share to 20%.

The cluster is designed to process annually 45 billion cubic metres of natural gas, produce 13 million tonnes of liquefied natural gas (LNG), 3.6 million tonnes of ethane and up to 1.8 million tonnes of liquefied petroleum gas (LPG).

A first stage is set to come on stream in 2024, while the second is to be launched in 2025.

Gas with high level of ethane from the Arctic region of Yamal is seen as the resource base for the complex. Gas from the Tambey field on the Yamal peninsular will be used in the future.

Gazprom said on Friday it has signed an agreement with RusGazDobycha to develop the Tambey fields, which is due to start gas production in 2026.

The deal could be is seen as a setback for another Russian large gas producer, Novatek, which had also sought to develop the Tambey fields with Gazprom.

Novatek has its own plant in the region, Yamal LNG, with annual production of around 19 million tonnes. (Reporting by Vladimir Soldatkin; Editing by Alexander Smith)