Russia's VTB says financing 'in full swing' for huge Ust-Luga gas complex

By Elena Fabrichnaya

Funding of a giant gas processing complex in Russia's Baltic Sea port of Ust-Luga is well under way, the country's second-largest lender VTB VTBR said, underscoring Moscow's determination to develop its energy sector despite sanctions.

The complex is part of Kremlin-controlled energy giant Gazprom's (GAZP.NN) strategy to shift its focus to processing, and will combine a gas processing plant and a gas chemical complex.

"The funding of the project is in full swing, including by bank loans," VTB Chief Financial Officer Dmitry Pyanov told reporters in comments cleared for publication on Friday.

The project would create Russia's largest gas processing plant and one of the world's biggest in terms of production volumes.

It is designed to process 45 billion cubic metres of natural gas and produce 13 million metric tons of liquefied natural gas, 3.6 million tons of ethane and up to 1.8 million tons of liquefied petroleum gas annually.

Construction of the complex started in 2021 but has been delayed, by Western sanctions over Ukraine, among other factors.

Russian government documents show the first line of the gas processing plant is expected to start in 2026, while the first line of the liquefied natural gas plant is set to start working in 2027.

In July, VTB acquired a subordinated loan of 200 billion roubles ($2.50 billion) from the state National Wealth Fund for the Ust-Luga project.

In June, VTB's head Andrey Kostin said the bank would allocate 800 billion roubles over several years to fund the complex.

The total investment is estimated at 5 trillion roubles ($61.50 billion), Russian media say.

Complex operator RusKhimAlyans, a subsidiary of Gazprom, has been engaged in legal proceedings against industrial gases multinational Linde LIN and a number of European banks over their decision to withdraw from the project.

($1=81.3000 roubles)