| Exxon Neftegas signed an agreement on the principles of gas supplies to China The international consortium developing the Sakhalin-1 project yesterday confirmed the signing of a preliminary agreement on natural gas supplies under the project with the Chinese state-owned company CNPC. Although the Sakhalin PSAs are not officially subject to the law “On Gas Exports,” which Vladimir Putin signed in mid-July, the president personally recently “forbade” discussing independent gas supplies to China. And last week, at a meeting between the head of Gazprom, Alexey Miller, and the chairman of the board of CNPC, Chen Geng, the Chinese side was clearly hinted that “any gas supplies from Russia can only be carried out through a single export channel, subject to priority satisfaction of the gas demand of Russian consumers.”
Exxon Neftegas told Vremya Novostei that it is simultaneously “discussing with Gazprom/Gazexport possible options for pipeline gas supplies to northeast China.” Representatives of the Russian concern could not confirm this information. However, earlier at the board of directors of Gazprom, the company’s management declared its intention to purchase the entire volume of gas from Sakhalin-1.
As part of the Sakhalin-1 project, it is planned to develop the Chaivo, Odoptu and Arkutun-Dagi fields on the north-eastern shelf of Sakhalin Island. The potential recoverable reserves of these fields are about 307 million tons of oil and 485 billion cubic meters of gas. Gas production is planned at 10-11 billion cubic meters per year. Of these, 3 billion cubic meters were contracted by Khabarovskenergo and Khabarovskkraigaz. Exxon Neftegas was going to export the rest of the gas. At first, the option of an offshore pipeline to Japan was considered, and after Japanese consumers preferred liquefied gas, work began with China.
“The agreement is a logical continuation of the Memorandum of Understanding agreed upon by the companies in November 2004,” the project operator said in a statement. “This is expected to lead to the signing of a formal purchase and sale agreement, the execution of which will be coordinated by representatives of the Sakhalin-1 consortium and the government of the Russian Federation.”
At the same time, it is obvious to everyone that the White House will not act as a guarantor of gas supplies by an international consortium (even despite the fact that the 20 percent share belongs to the state-owned Rosneft). Moreover, Vladimir Putin personally forbade the governor of the Khabarovsk Territory, Viktor Ishaev, from thinking about extending the Sakhalin-Khabarovsk pipeline to China. “We came here by pipe to Khabarovsk, to the Khabarovsk Territory. This is gas for domestic consumption,” the president said at a meeting with the governor in September. -- In accordance with current legislation, Russia has a single export window. This is the Gazprom company. It is important that neither shareholders nor all interested parties are tempted to send abroad what is intended for domestic consumption.”
Exxon Neftegas understood this, but still decided to have a direct agreement with the Chinese so as not to be completely cut off from decision-making. It should be easier to enter into negotiations with Gazprom with such a document in hand. On the one hand, it is possible to negotiate more favorable terms for the sale of raw materials into a single export channel, on the other hand, it is possible to achieve, in principle, acceleration of the gas part of the project, because Beijing, which is interested in this, will be able to slightly push Moscow to more actively promote plans for gas exports along the eastern corridor.
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Yesterday in Houston there was a meeting of the authorized government body of the Sakhalin-1 project (it consists of Russian officials), at which the estimate for 2007 was considered. According to the administration of the Sakhalin region, Exxon Neftegas Limited proposed to approve the project cost estimate for 2007 in the amount of more than $1.293 billion. The project cost estimate for 2006 was approved in the amount of $1.6 billion. In addition, the operator proposes to increase the total estimate project costs from 12 to 17 billion dollars, but it has not yet been approved. The report states that “there is now disagreement regarding spending.” The results of the meeting yesterday were unknown. Alexey GRIVACHS |
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