Gazprom Tries to Capitalise on Western Sanctions, Strengthen LNG Leadership
Gazprom is trying to strengthen its leadership in Russia’s plans to trigger Liquefied Natural Gas (LNG) production in the country, saying that Exxon Neftegas Limited should sell its future LNG “on an arm’s length basis.’
“To avoid the unnecessary budget overruns, the more so they are covered by the state budget, Gazprom proposed the Sakhalin I project operator to sell its future LNG volumes to the company on an arm's length basis. This deal would help to make the most of the existing liquefaction infrastructure in Sakhalin and to produce liquefied natural gas with enhanced competitive ability for the market instead of building another greenfield LNG plant. It's possible to reach a synergy from coordinated actions of the parties involved in two PSA projects through a gas purchase and sale scheme,” said Gazprom’s Viktor Timoshilov.
During the Sakhalin Oil and Gas 2014 conference, Gazprom also proposed concerted efforts to plan and execute major gas projects in the Far East. But the company led by Alexey Miller clearly wants to lead the dance.
Gazprom owns 50% plus 1 share of Sakhalin Energy Investment Company Ltd, which is a consortium for developing the Sakhalin II oil and gas project.
Sakhalin Energy is working on a gas distribution network on Sakhalin island and several upgrade projects.
‘The company is implementing a number of growth projects, along with a program of activities aimed at sustaining our production. They include the Front End Compression project at the OPF, our Platform Life Extension and upgrade projects, as well as preliminary activities under the LNG train 3 project. As part of its in-kind royalty payment obligations, Sakhalin Energy, together with the Sakhalin Government and Gazprom, participates in the ongoing dialogue regarding various issues associated with the development of a gas distribution network on Sakhalin island,’ Sakhalin Energy CEO Roman Dashko commented in a separate note.
During the same conference, as reported by Reuters, Russian Deputy Energy Minister Kirill Molodtsov said that Rosneft and US’ ExxonMobil are continuing to drill in the Kara Sea. They plan to stop activities by October 10.