Gazprom eyeing earlier start at Sakhalin-3

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Oct. 20 -- Russia's state-owned OAO Gazprom plans to start production at the Sakhalin-3 project's Kirinsky field in 2011 or 2012, 2-3 years ahead of schedule, according to a senior company executive.

“I think that at the end of 2011-12 we could already start production at the Kirinsky field,” said Alexander Mandel, head of OOO Gazprom Dobycha Shelf, the Gazprom subsidiary that oversees offshore projects.

“It had been planned that development of Kirinsky will start in 2014,” Mandel said of the field, which is a part of the Sakhalin-3 offshore project whose gas reserves are estimated at 75.4 billion cu m.

Mandel said the decision to speed up the launch of the Kirinsky field development would depend on demand for gas in the region and Gazprom plans to launch the Sakhalin-Khabarovsk-Vladivostok gas pipeline.

According to analyst IHS Global Insight, “The change of plans at Kirinsky follows the signing last week of a framework gas supply agreement between Gazprom and China’s CNPC.”

IHS Global Insight also said the speed-up at Kirinsky followed another reported agreement in principle on gas prices between Russia and China, which could see Gazprom deliver up to 70 billion cu m/year of gas to China in the next decade.

“Accelerating the development of the Kirinsky field could provide Gazprom with volumes needed for the Khabarovsk-Vladivostok pipeline and put more pressure on ExxonMobil [Corp.] regarding gas production from Sakalin-1,” the analyst added.

Meanwhile, stepping up pressure on potential Asia-Pacific buyers, Gazprom Deputy Chairman Alexander Medvedev told Japan’s Nikkei Business Daily the state-owned natural gas monopoly will likely partner with Mitsui & Co. and Mitsubishi Corp. on the Sakhalin-3 project.

When asked about the chances of Japanese companies taking part in the Sakhalin-3 project, Medvedev reminded the paper that Gazprom already has contracts with Royal Dutch Shell PLC, Mitsui, and Mitsubishi, which hold stakes in the Sakhalin-2 project.

“Those contracts stipulate that Gazprom give priority to the three firms once it obtains the development rights to the project and decides to seek cooperation with foreign businesses,” he said.

Regarding disagreements over where to send output from Sakhalin-1, Medvedev said the Russian government, under its industrial development plans for the Far East and eastern Siberia, has clearly stated natural gas from the Sakhalin-1 project will be supplied to the domestic market.

“Sakhalin-1 shareholders are calling for the output to be exported to China, but we cannot agree with such a move,” he said, referring to ExxonMobil, Itochu Corp., and Marubeni Corp. “We will likely consider exporting LNG to China and South Korea from other gas fields in eastern Siberia,” he said.

When asked about the disruption of gas supplies from Russia to Europe early this year, Medvedev said it was caused by a domestic political conflict in Ukraine and that there should be no concern for markets in Asia Pacific.

“We can promise that we will be able to fulfill our gas supply contracts for the Asia-Pacific region. We only have economic motives. We have never intended and will never intend to use gas supplies as a political tool,” he said.

Contact Eric Watkins at hippalus@yahoo.com.

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