Rosneft Muscles In on Gazprom With LNG Plan

Rosneft, the Russian energy major which has previously concentrated on oil, has declared plans to pair with ExxonMobil in a liquefied natural gas venture. This appears to intrude on plans by gas behemoth Gazprom to operate a LNG plant in Vladivostok.

Rosneft chief executive officer Igor Sechin, quoted by agencies, said his company wants to start supplying LNG to Asia from 2018. Gazprom plans to launch its own plant in the port of Vladivostok.

The Russian and US energy giants are to study the possibility of building a plant to liquefy gas from their Sakhalin-1 oil and gas project off Russia's Pacific coast.

Only Gazprom, by state law, has the right to export gas from Russia. Rosneft is, however, lobbying to win the right to export LNG, as is Russia's largest independent gas producer Novatek.

Sechin said the annual capacity of the plant's first line would total 5 million tonnes.

The LNG project, either on Sakhalin Island or in the Khabarovsk region on the Pacific coast, could cost $15 billion (€11.5bn), Neil Duffin, Exxon’s president for development, said in a video conference with Sechin and Russian President Vladimir Putin. 

Russia is the world's second largest producer of conventional natural gas after the United States, but has only one working LNG plant, a 10-million-tonne-per-year facility operated by a Gazprom-led consortium that includes Royal Dutch Shell and Mitsui.

Putin has said the production of LNG, which can be shipped by sea, should be made a priority, enabling Russia to diversify away from supplying pipeline gas to Europe's weakening market.