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Gazprom sees no need to use others' gas in Power of Siberia pipeline
September 15, 2016 / 3:22 PM / a year ago

Gazprom sees no need to use others' gas in Power of Siberia pipeline

A logo of Gazprom Neft oil company is seen at a petrol station in Moscow, Russia, March 11, 2016. REUTERS/Maxim Shemetov/File Photo

MOSCOW (Reuters) - Russia’s Gazprom (GAZP.MM) plans to use only its own natural gas for the Power of Siberia pipeline to China and sees no need to buy gas from domestic rivals, Gazprom Deputy CEO Alexander Medvedev said on Thursday.

Since western powers imposed sanctions on Russia in 2014, Moscow is actively turning eastwards. Gazprom’s domestic peers such as state oil company Rosneft (ROSN.MM) are lobbying for access to the Power of Siberia.

“Our assumption is that Power of Siberia will be supplied by gas from our fields. We see no need (to buy gas from others),” Medvedev told the Reuters Russia Investment Summit.

Gazprom is building the pipeline and developing the fields needed to feed the route at a total cost of $55 billion.

Gazprom plans to supply China with 38 billion cubic meters of gas per year over 30 years, to start in 2019.

In a sign of a growing rivalry over the eastern route, little-known UDS Energy last month beat Rosneft, Surgutneftegas, Novatek and the Fund Energy of ex-energy minister Igor Yusufov, among others, for a field close to the pipeline in Russia’s Yakutia region.

LNG PLANS

The United States, Qatar and Australia are all expanding liquefied natural gas (LNG) operations while Russia still holds less than 5 percent of the global market, running the sole LNG plant at the Pacific island of Sakhalin.

Medvedev said that as the gas market is becoming more global, the number of swap deals will only increase. “I do not exclude that Gazprom will be a part of these swap operations, including with U.S. suppliers,” he said.

Gazprom plans to add a third production line at Sakhalin-2 LNG plant - a plan Medvedev said was unchanged - which would allow Russia to increase its share globally.

To add the capacity to Sakhalin-2, currently at 10 million tonnes of LNG per year, Gazprom plans to use the Yuzhno-Kirinskoye field - under U.S. sanctions - as one of the sources.

Shell (RDSa.L) may get a stake in the field as a part of swap deal with Gazprom. Medvedev said that Gazprom had not yet choosen which assets it wanted under its deal with Shell.

Asked if Gazprom needs a partner to develop the field, Medvedev said that there was no such equipment being produced in Russia, but, “this does not mean it won’t be produced tomorrow.”

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Additional reporting by Andrey Kuzmin, Alexander Yershov, Anastasia Lyrchikova, Denis Pinchuk and Christian Lowe; Editing by Dale Hudson and Andrew Heavens

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