Paula Dittrick
Senior Staff Writer
HOUSTON, Feb. 14 -- OAO Gazprom plans to become a major LNG supplier and is building its LNG expertise, particularly in North American markets, according to John Hattenberger, LNG director of Gazprom Marketing & Trading Ltd. of London.
"We plan to partner with LNG players. This is not a business for us to enter alone," Hattenberger said during the annual Cambridge Energy Research Associates energy conference. "We are partnering with a number of major LNG players."
Hattenberger said Gazprom supplies gas via pipeline to 21 countries in western Europe. Last year, Gazprom sold one LNG cargo in the US. It acquired the Algerian LNG in a swap with Gaz de France for pipeline gas and sold it to Shell Western LNG through the Cove Point, Md., terminal (OGJ, Dec. 5, 2005, Newsletter).
"We're working with a number of players to develop a gas market and a trading position here in the US" and might open an office in Houston, Hattenberger said.
Reserves
Noting that Russia has about one third of the world's proved gas reserves, Hattenberger said, "While many of those reserves are in remote and inhospitable places with high development costs, we still have an abundance of gas reserves which can be easily commercialized."
Much of the gas is close to Gazprom's pipeline network.
"We intend to participate in all elements of the value chain," Hattenberger said. "We will produce the gas. We will participate in the liquefaction, in shipping, and in the regas facilities."
Gazprom has marketing skills to use in the LNG business, he added.
LNG projects
Gazprom signed a memorandum of understanding with Royal Dutch Shell Group PLC to swap Gazprom's shares in western Siberia's Zapolyarnoye field for part of Shell's interest in the Sakhalin II project.
The transaction is expected to close sometime this year, Hattenberger said. The memorandum calls for Gazprom to acquire as much as 25% plus one share in Sakhalin II. Shell plans to acquire a 50% interest in Zapolyarnoye's Neocomian gas-condensate reservoirs, about 200 km northeast of Urengoi gas field in northern Russia (OGJ, July 18, 2005, p. 30).
Another LNG project Gazprom plans would liquefy gas in Russia from Shtokman gas and condensate field awaiting development in the Barents Sea.
Shtokman gas is "an excellent candidate for LNG" because it's too remote to be sold via pipeline to Europe, he said. Plans call for development in three phases with 15 million tonnes/year each. Start-up of the first phase is planned for 2012.
A third project is Baltic LNG, which would liquefy in a 3-5 million tonne/year plant near St. Petersburg 700 MMcfd of about 55 bcfd of gas Gazprom transports through the Unified Gas System.
"There is not a dedicated gas reserve or gas field position associated with the project," Hattenberger said of Baltic LNG. "It's a small amount of gas moved through a very large system that Gazprom already controls."
The target market would be primarily North America, although there would be access to the UK or western Europe. Baltic LNG could be moving to markets in 2009-10, he forecast.
"Gazprom is in a unique position because of its pipeline system in western Europe," Hattenberger said. Numerous countries take both pipeline gas and LNG, he said, adding that Gazprom can access most of those countries.
Contact Paula Dittrick at [email protected].