Defiant Putin launches £20bn liquefied natural gas plant in the Arctic

Russia has opened a multi-billion pound liquefied natural gas (LNG) plant in the Arctic with the hope of becoming the world’s biggest exporter of the cold fuel.

President Vladimir Putin boasted that he had defied critics to open the £20bn plant in the country's northern region of Yamal - a move aiming to surpass Qatar in exporting LNG.

"This is a large-scale project for Russia," said the leader as he congratulated workers while overseeing the first gas shipment being loaded onto a tanker in -28C temperatures.

"At the start of the project, people told me not to pursue this. Those who started this project took a risk but achieved a result."

Khalid al-Falih, Saudi Arabia's energy minister, and other officials attended the launch, which saw Russian gas producer Novatek partnering with France's Total and China National Petroleum Corporation (CNPC).

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The project's first deputy director, Dmitry Monakov, appeared to take a swipe at Qatar as he said producing LNG in permafrost was easier than in warmer climates.

He said: "Nature itself helps us to more effectively liquefy gas with the help of such low temperatures."

Mr Monakov also said transportation costs were low as the plant effectively sat on a gas field.

Total chairman Patrick Pouyanne praised the "low upstream costs" and added: "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."

The Yamal facility aims to demonstrate the capacity Russia, the world's biggest gas exporter, has to exploit its Arctic reserves while strengthening its market presence in Asia.

The first LNG cargo tanker, which is named after former Total CEO Christophe de Margerie, who died in an accident on a Moscow airport runway in 2014, is expected to leave on Saturday for China.

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The Yamal LNG company is owned by Novatek - 50.1%, Total - 20%, CNPC - 20%, and Silk Road Fund - 9.9%.

Samuel Lussac, oil and gas specialist at Wood Mackenzie consultancy, said: "Despite challenging operating conditions, Yamal LNG was delivered on time and on budget.

"That is unusual in the LNG industry.

"Novatek, once a domestic gas supplier, becomes a global LNG player."

The plant launch comes despite difficulties securing financing with US sanctions on Novatek making it extremely difficult to borrow from Western banks, leading to Chinese partners stepping in.

However, Yamal LNG still faces risks according to some analysts.

Mr Lussac said the coming months would show "whether the plant can operate smoothly in the harsh Arctic environment".

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