Here's Why Russia Plans to Build Artificial Islands in Barents Sea

Four artificial islands will be built in the Barents Sea, according to a decree signed by Russian Prime Minister Dmitry Medvedev on Saturday.

The document read that land strips in the Barents Sea will be used to manufacture large-capacity maritime facilities. The initiative is part of a large-scale project to explore new gas fields in Yamal, run by energy company Novatek.

The center will manufacture maritime equipment for the liquefied natural gas (LNG) producing industry, including storage, shipping and maintenance facilities.

The project will be funded by Kola Shipyard, with total costs estimated to reach over 25 billion rubles ($433 million).

"The construction of the center will create nearly 10,000 jobs, increase tax revenues, attract additional investments to the region and develop new hi-tech industries," the document read.

Strategically Important Project

The center is planned to be built by late 2020 near the village of Belokamenka in the Murmansk Region. The first dry dock is expected to be commissioned in the first half of 2019.

During the 2017 St. Petersburg International Economic Forum (SPIEF) in June, Novatek signed a memorandum of understanding on an investing  agreement with the Russian Commerce Ministry and the government of the Murmansk Region.

"A center to manufacture large-capacity maritime facilities would be very important to further explore the enormous resource potential of Russia’s Far North. Such a facility will increase the competitive ability of future LNG projects," Novatek CEO Leonid Mikhelson said.

In turn, the Murmansk government said that investments in the region would reach over 50 billion rubles ($866 million). The initiative has a strategic investment project status.

LNG From Yamal

The potential LNG production on the Yamal Peninsula, including the Gydan Peninsula, is estimated at 70 million tons a year.

Equipment manufactured by Kola Shipyard will be used by Novated for a planned LNG facility on the Gydan Peninsula. Its gas reserves are estimated at over 1.2 trillion cubic meters. The facility will be built on platforms near the coastline.

The project will be the second LNG facility in the region. The first one is currently being constructed as part of the Yamal LNG project. It has an annual capacity of 16.5 million tons. A total of three production lines will be built, with the first to become operation this year. The facility will start operating at full capacity in 2019.

LNG will be shipped on ice-class LNG tankers at the port of Sabetta and then transported via the Northern Sea Route. A total of 15 LNG tankers are planned to be constructed. The first was recently named after Christophe de Margerie, the former head of Total, who died in a plane crash at the Vnukovo airport in Moscow in 2014.

The tanker can withstand temperatures of up to 61 degrees Fahrenheit below zero and navigate ice layers of up to two meter thick. It is capable of carrying over 172,000 cubic meters of LNG.

According to Russian Energy Minister Alexander Novak, after Yamal LNG starts operating at full capacity gas exports from Russia will increase by 10 percent and Russia’s share in the global LNG market will expand to eight-nine percent.