Russian state-controlled Gazprom is targeting exports of up to 25mn t/yr of LNG to Asia-Pacific as it increasingly focuses on supplying LNG rather than pipeline gas to the region.
“LNG exports to Asia-Pacific markets from our new far east projects could reach 10mn-25mn t/yr, depending on feasibility study results,” Gazprom export director Alexander Medvedev said yesterday.
The firm could be exporting 20mn-25mn t/yr to Asia-Pacific by 2030. But Gazprom's LNG export forecast is highly dependent on Japan's decision to r-start its nuclear plants following March 2011's Fukushima crisis.
China, India, South Korea, Pakistan, Taiwan and Vietnam are also potential markets for Russian LNG. Gazprom will “soon” finalise preliminary supply agreements signed with Indian companies last year, Medvedev said. The Russian firm could begin exporting around 7.5mn t/yr of LNG to India from 2016 under these agreements. LNG supplies would come from Gazprom's Shtokman venture in the Barents Sea, its far east projects and swap arrangements.
High Asia-Pacific spot and long-term contract LNG prices are a key reason that Gazprom is increasingly favouring LNG over pipeline gas. Uncertainty over Chinese demand for imported gas, because of its discovery of unconventional gas resources, is another reason why Gazprom is reluctant to push pipeline exports. LNG gives sellers more flexibility than a pipeline agreement. Besides, more companies in China are willing to buy LNG, while pipeline gas import is monopolised by China's state-controlled CNPC, Medvedev said.
Gazprom no longer sees value in exporting gas to South Korea by pipeline through North Korea — a project which the firm lobbied intensively for last year. Pipeline exports to South Korea will only be realised if LNG exports prove economically unviable, Medvedev said. South Korea is prepared to buy up to 10bn m³/yr of Russian gas from 2017.
Gazprom holds a 50pc stake in the 10.6mn t/yr Sakhalin 2 LNG project on Sakhalin island just north of Japan. An engineering study for a third 5mn t/yr train at the project is under way. The firm is also working on a feasibility study for a planned 10mn t/yr LNG plant near the Russian far eastern city of Vladivostok. Both studies are to be finalised this year, with a decision on “further steps” to be made shortly afterwards, Medvedev said. Gazprom's LNG export forecast of 20mn-25mn t/yr suggests that both projects could be operational by 2030.
The Russian firm also plans to export LNG to Asia-Pacific from its 3.9 trillion m³ Shtokman field in the Barents Sea. Shtokman exports will come on top of the planned 10mn-25mn t/yr from the firm's far eastern export facilities. “This would be mainly direct physical supplies from the field, with some swap arrangements,” Medvedev said. He declined to reveal how much of the Shtokman LNG could be sold to Asia-Pacific and how much to Europe. Gazprom plans to liquefy all 23.7bn m³/yr produced from phase one of Shtokman. Medvedev did not rule out the possibility that gas from further Shtokman projects could be liquefied.