By June 17, 2016 Read More →

Russia floats idea of gas exports to China from Exxon venture


The Russian energy minister met with Exxon Mobil’s Rex Tillerson in St Petersburg earlier this week.  The two discussed options allowing the US energy giant to sell gas from its Sakhalin Island project to China.  Company photo.

Exxon Mobil’s Sakhalin Island gas project may ship LNG to China

ST PETERSBURG, June 17 (Reuters) – Russian Energy Minister Alexander Novak said on Friday that Exxon Mobil’s oil and gas project on the Russian Pacific island of Sakhalin may secure rights to export natural gas to China.

U.S. energy giant Exxon is an operator of the Sakhalin-1 offshore deposits being jointly developed with Russian state-owned Rosneft under a production-sharing agreement (PSA) formulated in the 1990s.

The project’s gas deposits have long been locked in due to a price row between Sakhalin-1 and Gazprom, which has a monopoly right to export gas.

After meeting Exxon Chief Executive Rex Tillerson on the sidelines of the St Petersburg International Economic Forum, Novak said he had discussed with him three options allowing Sakhalin-1 to sell gas.

Those included liquefying the fuel with Rosneft; and to sell it to the nearby Sakhalin-2 – the sole Russian LNG producer, a joint venture of Gazprom, Shell and Japanese partners.

“The third option is gas supplies to China,” Novak told reporters. He added that the PSA may allow Sakhalin-1 to sell gas abroad despite the Gazprom monopoly.

Gazprom has built a pipeline from Sakhalin to the city of Vladivostok near the Chinese border, also aiming to deliver gas via that route.

Sakhalin-2 on Thursday called a tender to build a third production train for the Gazprom-Shell LNG plant, which also needs gas from Sakhalin-1 to expand its capacity.

(Reporting by Denis Pinchuk; Editing by Dale Hudson)

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