Gazprom moved a Canadian liquefied natural gas terminal ahead on Thursday by taking a stake and agreeing to supply all the gas needs from the Russian producer’s huge Shtokman project, the companies said on Thursday.
Gazprom, the world’s largest natural gas company, is joining Enbridge Inc, Gaz Metro and Gaz de France in developing the C$840 million ($840 million) Rabaska LNG project in Quebec, which has been stalled pending a secure supply of imported LNG. It will be the Russian firm’s first major investment in North America, Alexander Medvedev, deputy chairman of Gazprom’s management committee, said in a statement.
The companies did not disclose the size of stake Gazprom will acquire in the 500 million cubic feet a day project, to be located on the St. Lawrence River at Levis, Quebec. Gas from the plant would supply the Quebec and Ontario markets. Glenn Kelly, Rabaska’s president, said each of the partners is giving up a portion of its 1/3 share.
The project is now expected to go ahead in 2014, two to three years later than first envisioned. That coincides with the planned startup of a liquefaction plant at Shtokman, located in the Barents Sea, 450 km (280 miles) northeast of Murmansk. The Rabaska partners have all their regulatory approvals in place, but have yet to start building the project. “We said publicly we wouldn’t go ahead with construction until we had an LNG supply, and today has been a significant step toward that,” Kelly told Reuters. Construction is now expected to start in 2010, he said. The partners aim to sign definitive agreements bringing Gazprom into the fold before the end of this year.
Some North American LNG plants were first proposed a few years ago when the continent appeared to have numerous choices for imported gas supplies. But that has changed as demand has outstripped supply, executives have said.
A rival Quebec LNG project at Gros Cacouna, proposed by Petro-Canada and TransCanada Corp, was thrown into limbo early this year when Gazprom canceled a $3.5 billion liquefaction plant it had planned to build on the Baltic Sea. Petro-Canada had been shortlisted as a partner for that project and was counting on the supply for the C$1 billion Gros Cacouna terminal. “It’s turned from a buyer’s market into a very, very tight seller’s market. There’s about eight units of demand for ever unit of offer out there,” Kelly said. “And add to that about 50 projects in North America all competing for that small slice of demand. You can understand why we’re quite pleased Gazprom is interested.” (Reuters)