September 25, 2013, 11:52 am / Business

Gazprom: Rosneft does not need a new plant on Sakhalin

There will not be enough gas from the Sakhalin fields to load the new plant, says Gazprom top manager Viktor Timoshilov; Rosneft thanked its competitor for its attention Natalya Raibman

A. Semenov / ITAR-TASS

is planning to build a new LNG production plant on Sakhalin Rosneft . A day earlier in Yuzhno-Sakhalinsk, vice-president of the oil company Vlada Rusakova said that by the end of the week Rosneft would select a contractor for the design, the project would be ready in 2014, and at the beginning of 2015 the company expected a final investment decision, construction would be completed in 2018

Gazprom considers it inappropriate to build a new liquefied natural gas plant on Sakhalin. ITAR-TASS reports this, citing materials for the Gazprom press conference in Yuzhno-Sakhalinsk. Gazprom already has the necessary infrastructure to use the resource base on Sakhalin; there is no need to build a new one, said Viktor Timoshilov, head of the coordination department for Gazprom’s eastern projects.

The existing volume of gas from Sakhalin fields will not be enough to load the new plant, Timoshilov said on Wednesday. “I just want to say that there is no need to build a plant,” Prime quotes him. If additional infrastructure is included in the costs of the Sakhalin-1 project, then the state will have to reimburse these costs, and this will be irrational, Timoshilov believes. According to him, it is more rational to direct gas from the Sakhalin-1 project in the amount of 8-10 billion cubic meters per year to the existing plant for the production of liquefied natural gas within the framework of the Sakhalin-2 project controlled by Gazprom.

When asked whether the new LNG plant could be loaded with reserves from the Sakhalin-3 project, owned by Rosneft, Timoshilov replied that they were insufficient and Gazprom might consider purchasing them. He added that the agreements previously announced by Rosneft on the sale of 5 million tons of LNG per year from the projected plant are not binding. “I dare to assure you that we have no information that this is really a contract,” Prime quotes. Gazprom proposes to abandon the Rosneft project. When asked how the company can influence other people's plans, Timoshilov said that “we are not going to influence anyone - we are extending a helping hand,” ITAR-TASS reports.

It was previously reported that the new LNG plant is a joint project of Rosneft and ExxonMobil. The capacity of the first stage of the plant may be 5 million tons per year, its volumes have already been contracted by Japanese companies Marubeni Corp. and Sodeco, as well as trader Vitol. Investments in the project are estimated at $15 billion. From 2019, Rosneft plans to annually supply 1.25 million tons of LNG to Marubeni, 1 million tons to Sodeco, and 2.75 million tons to Vitol.

Timoshilov also said that Gazprom is ready to continue negotiations on the purchase of 8-10 billion cubic meters of gas per year from the Sakhalin-1 project with the project operator ExxonMobil, which will allow the implementation of the gas component of the project. Gas reserves, taking into account the approved project documents for the development of the Lunskoye and Piltun-Astokhskoye fields of the Sakhalin-2 project, will not be enough to maintain the load on the two lines of the LNG plant, he noted. For the entire life of the project - until 2041 - the gas shortage could reach up to 115 billion cubic meters, Gazprom has calculated. Taking into account the construction of the third line of the plant, Gazprom will need additional volumes of gas, which can be purchased from the Sakhalin-1 project. Part of the gas from the Sakhalin-1 project could also go into the Sakhalin-Khabarovsk-Vladivostok gas pipeline, Timoshilov added.

Rosneft considers the construction of an LNG plant in the Far East to be a move in the right direction, as a result of which the market will change not in favor of competitors. A representative of the oil company told Prime about this. “We thank our partners and competitors for constantly drawing the market’s attention to the large-scale projects that Rosneft is implementing that strengthen the company’s position,” he said. According to him, this means that the company’s projects are correct and cause competition a natural concern. A comprehensive analysis of the possibilities for monetizing the project, which was carried out by Rosneft and ExxonMobil, allowed us to draw conclusions about the effectiveness of its implementation, he added. “The partners do not need additional assessments from competitors,” the Rosneft representative noted.