Russia eyes exports of eastern gas

March 15, 2005
Russia is developing an export strategy for natural gas from its far eastern producing regions.

Eric Watkins
Senior Correspondent

LOS ANGELES, Mar. 15 -- Russia is developing an export strategy for natural gas from its far eastern producing regions.

Alexei Mastepanov, an advisor to OAO Gazprom Chairman Alexei Miller, described the strategy—called the "Eastern Program"—at the 2005 Russian-Japanese Economic Forum in Niigata, Japan.

Mastepanov said gas production in Russia's eastern regions could increase to 50 billion cu m (bcm)/year by 2010 and nearly 110 bcm/year by 2020.

He said development of a natural gas complex in the east of the country must be based on existing infrastructure, consisting of Irkutsk, Krasnoyarsk, Yakutsk, and Sakhalin facilities.

The goal of the development, he said, is to create large production facilities based on gas exports and gas processing.

Gazprom's Eastern Program requires large investments, including $40-45 billion for exploration and $15-20 billion for production infrastructure, Mastepanov said.

Also at Niigata, Yury Shchukin, director of a Sakhalin research institute, said expected production levels of 50-60 million tonnes/year of oil and 65-85 bcm/year of natural gas will make Sakhalin Island a major producing center by the mid-2020s.

"These levels meet both the internal needs of the Far Eastern region of Russia and import requirements of neighboring countries," he said.

Schukin said greatest hopes are pinned on Sakhalin-3 and Sakhalin-5, which could surpass Sakhalin-1 and Sakhalin-2 in output.

At the same conference, BP Marketing Director Neil Beveridge cited the importance to Russia's role as a gas exporter of diversification to the West and the Asia-Pacific region.

He said the rise of natural gas consumption in the Asia-Pacific region is estimated at 2.5%/year, including the increase of gas consumption in China from 50 bcm/year in 2005 to 180 bcm/year in 2020, and in Japan from 80 bcm/year to 100 bcm/year.

He said Russia would aim first to satisfy domestic demand and in the future would build gas pipelines connecting its gas fields in Sakhalin with Japan and in Eastern Siberia with China and South Korea.

However, Beveridge cautioned that implementation of the Eastern Program will depend on Russia's success in the development of resources and export markets, optimization of internal and external demand, and success in attracting $50 billion in investment.