Gazprom eyes Korea, Japan partners for gas projects

Energy Trade

Russian gas monopoly Gazprom will consider inviting South Korean and Japanese partners to process gas in the country’s far east as it prepares to become a major supplier of liquefied natural gas.

Gazprom executives said on Tuesday the company was also exploring ways to supply gas to South Korea from the far eastern Russian city of Vladivostok as part of an agreement with state-run Korea Gas Corp that will run until 2013. Deputy CEO Alexander Medvedev told a news conference a pipeline would be the cheapest way for Gazprom to move gas to South Korea but that the division of Korea made this difficult.

North Korea lies between Vladivostok and South Korea. “The idea of sending gas by pipeline to South Korea clashes with the division of the two Koreas,” Medvedev said. “The economical delivery of gas by pipeline needs to be resolved by the Koreans, and that’s also a question of their relations with the United States,” he said. Korea Gas is seeking to import 1.5 million tons a year of natural gas from Sakhalin-2.

Gazprom plans by 2020 to supply 21 billion cubic meters of LNG from a new plant on the island of Sakhalin to countries in the Asia-Pacific region. By 2030, it plans to raise supplies to 28 billion cubic meters per year. In a statement distributed to reporters at the news conference, Gazprom said it was considering partners for gas projects in the Russian Far East. “We are working out the possibility of the participation of Japanese and South Korean companies in projects to create gas processing and petrochemical production in the east of Russia,” Gazprom said in the statement.


Gazprom plans to start shipping LNG -- gas that is supercooled to liquid form for shipment in pressurized tankers -- from its Sakhalin-2 project by the beginning of 2009. Gazprom’s partners in Sakhalin-2 include Japan’s Mitsui, which has a 12.5% stake, and Mitsubishi, with 10%. Royal Dutch Shell owns 27.5%. From Sakhalin-1, another project on the Pacific island of the same name, Medvedev said it was unlikely gas would be sent to China, contrary to a preliminary agreement signed by its partner in the development, US oil major ExxonMobil. “We don’t see any prospects for sending gas from Sakhalin-1 to China,” Medvedev told the news conference.

ExxonMobil said in February gas from Sakhalin-1 could be exported as the Russian market would not require all of the gas produced there. The US company signed a preliminary agreement in 2006 to sell gas to China, but Gazprom last year asked the Russian government to block Exxon from selling Sakhalin gas in Asia, saying production was required for the domestic Russian market. Gazprom also plans to start production at the Kirinsky field, part of the offshore Sakhalin-3 project, in 2014, said Vasily Podyuk, head of the company’s production department. It is developing Sakhalin-3 jointly with oil major Rosneft. (Reuters)


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