October 13, 2014, 01:48 / Business

Gazprom may abandon the Vladivostok LNG construction project

Gazprom agreed to think about the proposal of its Chinese partners to abandon the construction of Vladivostok LNG and instead supply gas to China through the Alexander Terentyev pipeline Mikhail Serov

Sakhalin-2 may remain Gazprom's only LNG production facility / Gazprom Press Service

Refusal to build Vladivostok LNG could also be beneficial for Gazprom, the second interlocutor continues: due to sanctions, it is risky to start construction, the technology is mostly American, plus difficulties with financing. Gazprombank , which fell under sectoral sanctions, has the right to purchase 49% of Vladivostok LNG and was supposed to ensure the attraction of financing. In September, Deputy Head of Gazprom's Project Management Department Viktor Timoshilov told Interfax that Gazprom would explore the option of attracting Russian financing for this project.

“Gazprom is ready to consider the possibility of supplying pipeline gas for export to China as an alternative to the Vladivostok LNG project,” the press service of Gazprom Chairman of the Board Alexei Miller, who is at negotiations in China, quotes.

Gazprom expected to launch a plant for the production of liquefied natural gas (LNG) in Vladivostok in 2018. At the first stage, the plant’s capacity was supposed to be 5 million tons per year, the second stage assumed an increase to 15 million tons of LNG per year by 2020. Cost In 2012, at a meeting with President Vladimir Putin, Miller estimated the construction of the first two stages of the LNG plant at 220 billion rubles. Before the contract was signed to supply gas via the Power of Siberia pipeline to China, it was believed that the Chayandinskoye field in Yakutia would become the resource base for Vladivostok LNG. Then - that raw materials for the new plant will be supplied from the Yuzhno-Kirinskoye field on Sakhalin through the already existing Sakhalin-Khabarovsk-Vladivostok pipeline. Gazprom offered a stake in Vladivostok LNG to Chinese and Japanese investors.

Now the Chinese have offered Gazprom to abandon the LNG plant and supply Sakhalin gas to China through the existing pipeline, say two people close to Gazprom. Of course, the pipeline needs to be brought directly to the border and infrastructure must be created on Chinese territory, so gas will not arrive faster than from the LNG plant. But the Chinese are more interested in receiving raw materials through a pipeline than in building regasification capacities, explains one of Vedomosti’s interlocutors. Gazprom agreed to think about it, another interlocutor knows. CNPC and CNOOC did not respond to questions.

In addition, pipeline gas supplies at cost will be cheaper for Gazprom than LNG, notes Raiffeisenbank analyst Andrey Polishchuk. And it is not a fact that the price of LNG on the market will continue to rise: by 2018, new plants will have appeared that will balance demand, the analyst emphasizes. According to Miller, the share of LNG will not change and will remain at 30%.

But, an employee of one of Gazprom’s structures emphasizes, before resolving the issue of supplies through Vladivostok, Gazprom would like to agree with China on gas supplies along the “western route”: from the Yamal fields through Altai. Vedomosti's interlocutor does not explain why. “The contract is being prepared for the supply of 30 billion cubic meters. gas per year. The Altai project has a very high degree of readiness for the start of construction. In the future, the second and third strings of the gas pipeline can be built, reaching a potential capacity of up to 100 billion cubic meters. m per year,” Gazprom’s press service quotes Miller. In May, Gazprom and CNPC already signed a 30-year agreement on the supply of 38 billion cubic meters. m of gas per year.

Gazprom is acting correctly: before meeting the Chinese halfway in supplies through Vladivostok, it is necessary to guarantee supplies in the western direction, where competition is strongest (near Turkmenistan, Kyrgyzstan, etc.), explains Polishchuk.