October 23, 2013 / 4:28 PM / 4 years ago

Russia's Gazprom launches Pacific field production

* Gas from Kirinskoye to be used for future LNG plant

* Russia forges closer energy ties with Asia

* Putin presides from afar as output starts at new field

By Alexei Anishchuk

NOVO-OGARYOVO, Russia, Oct 23 (Reuters) - Gazprom’s Kirinskoye gas field off the Pacific island of Sakhalin began production on Wednesday, and output is expected to feed into a new liquefied natural gas (LNG) plant planned for the port city of Vladivostok.

State-controlled Gazprom, the world’s largest producer of conventional gas, is competing with international and domestic rivals, including Russia’s Rosneft, for the global LNG market, currently dominated by Qatar.

“Russia is taking yet another powerful step towards strengthening its position on the global energy markets,” Russian President Vladimir Putin told Gazprom officials gathered in Sakhalin via a video link from his residence outside Moscow.

Gazprom operates Russia’s sole LNG plant - a 10-million-tonne-per-year facility on Sakhalin - in a consortium that includes Royal Dutch Shell and Mitsui.

It aims to build a second plant in Vladivostok, pending deals to find investors and committed buyers.

Gazprom wants to produce 5 million tonnes a year at the Vladivostok LNG plant by 2018 and 10 million tonnes by 2020. It has held talks with foreign companies, including from Japan, about participating in the project.

Putin has urged Russian companies to produce more seaborne LNG, which can be shipped in tankers all over the world, and forge closer ties with Asia, as energy demand in Europe, its main gas buyer, slows.

In line with the eastward expansion policy, state-owned Rosneft signed a memorandum with China’s Sinopec to ship 100 million tonnes of oil over the next 10 years in a deal valued at $85 billion.

Kirinskoye’s reserves are estimated at 160 billion cubic metres of gas and 19 million tonnes of gas condensate, from which high-quality gasoline can be produced.

Analysts expect Gazprom to produce up to 200 million cubic metres of gas at Kirinskoye this year, with an increase to 1 billion in 2014.

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