LNG must not challenge Gazprom exports - Deputy PM

Fri Feb 15, 2013 12:52pm GMT

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* Novatek pushes for rights to export LNG

* Putin reluctant to scrap Gazprom's monopoly

MOSCOW Feb 15 (Reuters) - Russia will try to find a way to increase export rights for producers of liquefied natural gas (LNG) without creating competition for monopoly Gazprom , Deputy Prime Minister Arkady Dvorkovich was quoted as saying on Friday.

Putin has been reluctant to loosen Gazprom's legally protected monopoly on natural gas exports despite a plea from his longtime political ally, Rosneft Chief Executive Igor Sechin, to let offshore gas producers export LNG.

"I think that a consolidated position might be presented ... by the end of March, taking into account the key issue that the president has put forth: guaranteeing non-competition on the same markets between LNG and the traditional gas that Gazprom sells," Interfax news agency quoted Dvorkovich as saying.

Earlier this week Putin told an assembly of Cabinet ministers and energy industry chiefs that it was necessary to "consider the gradual liberalisation of LNG exports" and pressed Sechin on potential competition between LNG and Gazprom pipeline exports to Europe.

Putin has expressed concern at Gazprom's weakening hand in its main gas market and called for a rethink of Russia's gas export strategy to focus on LNG and Asia.

But several advanced LNG projects are outside Gazprom control, presenting a dilemma for Putin.

Access to export markets would be a boon to "independent" non-Gazprom producers, currently confined to the domestic market, but pose a threat to Gazprom in the longer term if it has to compete with lower-cost Russian producers.

Public debate over an exemption to the Gazprom export monopoly for producers of LNG was prompted by a request by Gazprom rival Novatek, which may not be able to put up gas exports as collateral on loans for its own Arctic LNG project if it has to sell the gas through Gazprom.

For now, Russia has only one operating natural gas liquefaction plant, operated by Gazprom, Royal Dutch Shell and Mitsui at Sakhalin-2, operated under production sharing.

Dvorkovich, responsible for the energy industry in the government, has not spoken out on LNG export rights, though he has said in the past the export monopoly is not up for discussion.

The Energy Ministry has in the past given cautious backing to the idea but Energy Minister Alexander Novak has suggested the decision is out of his hands and the deputy minister dealing with Novatek's request has resigned.