UPDATE 1-Gazprom wants Exxon to sell Sakhalin gas cheaply

Tue Nov 27, 2007 6:21pm GMT

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By Tom Bergin

LONDON Nov 27 (Reuters) - Russian gas export monopoly Gazprom (GAZP.MM) said partners in the Exxon Mobil Corp-led (XOM.N) Sakhalin-1 project should be prepared to accept a price similar to discounted, domestic levels for their gas.

Exxon wants to export gas from Sakhalin-1, offshore east Russia, to lucrative international markets.

But Gazprom wants to block this, saying the gas is needed for the domestic market, where prices are a fraction of international levels.

"We are prepared to pucharse the entire gas production of Sakhalin 1," Gazprom Deputy Chairman Alexander Medvedev told reporters in London, speaking through an interpreter.

"The people involved in Sakhalin-1 are very well aware of the price range in the Russian far east. I believe that this price level would be a good basis for our negotiation," he added.

The Sakhalin-1 partners also include Russian state-controlled oil company Rosneft (ROSN.MM), India's ONGC (ONGC.BO) and the Japanese consortium Sodeco.

Gazprom is the majority shareholder in the Sakhalin-2 project, also on Sakhalin Island, which plans to export gas as liquefied natural gas.

Exxon was not immediately available for comment. (editing by Mike Elliott)

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