Talks between U.S. oil giant Exxon Mobil Corp. (XOM) and Russia's state-controlled natural gas firm OAO Gazprom (GAZP.RS) have deadlocked over who should buy the gas that an Exxon-led consortium plans to develop off Russia's Pacific coast.

Gazprom has offered to buy all of the Sakhalin-1 project's gas to fill its own pipeline to the Pacific, near the Chinese border, but ExxonMobil says Gazprom's offer price for the gas is too low to justify the project investment.

Despite Gazprom's offer, the U.S. company is still pursuing a deal with China National Petroleum Corp., or CNPC, to export the gas directly to China , an Exxon executive said this week.

Either way, the Sakhalin-1 gas is likely to be exported. Meanwhile, China is securing gas and oil globally through large loans in exchange for energy supplies or by acquiring western companies and stakes in some of the most promising energy-development projects.

"We are working with CNPC on an arrangement," Stephen Terni, head of Exxon's Russian subsidiary Exxon Neftegas Ltd., told Dow Jones Newswires in an interview Thursday. "We have valuable hydrocarbons and want to commercialize them. We're talking to Gazprom, but are open to other alternatives as well."

ExxonMobil is operator of the Sakhalin-1 project. The consortium also includes Russia 's OAO Rosneft (ROSN.RS), India 's ONGC Videsh Ltd. (500312.BY) and Japanese joint venture Sodeco. They're ready to invest billions of dollars to develop around 485 billion cubic meters of natural gas at the consortium's Chayvo field off the coast of Sakhalin island.

The consortium's talks with Gazprom on marketing and exporting the gas to China remain unresolved, however.

Gazprom is building a new pipeline from Sakhalin through Khabarovsk to Vladivostok , which will be finished next year. The company needs more gas to fill the pipeline than it can supply from its own Sakhalin-2 and Sakhalin-3 projects alone.

Gazprom therefore plans to take all the gas from the Sakhalin-1 project at prices fixed at local market levels to meet the shortfall, Gazprom's Deputy Chief Executive Alexander Medvedev told Dow Jones Newswires in an interview Wednesday.

The state-controlled company ordinarily has a monopoly on gas exports from Russia , but Exxon holds the legal right to sell gas from the Sakhalin-1 project under the production sharing agreement signed in the 1990s.

Exxon's Terni said the price Gazprom is offering is too low to justify investments into the gas deposit, which will take around six years to develop.

"We are looking at a multibillion-dollar investment to develop that gas, and I don't think the government would be very happy if we build a project that didn't make any money," said Terni .

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