Shtokman launch to depend on Europe gas demand

An employee walks at Russian gas export monopoly Gazprom's Sudzha pumping station January 13, 2009.

MOSCOW (Reuters) - Gazprom (GAZP.MM) may delay the launch of the giant Shtokman gas field beyond 2013 should demand in Europe not recover fast enough, the Russian company's export chief told Reuters on Friday.

Deputy Chief Executive Alexander Medvedev also said Gazprom was considering partnering with South Korean state-owned company KOGAS (036460.KS), the world's biggest corporate buyer of liquefied natural gas, at an LNG project in Russia's Far East.

Medvedev told the Reuters Russia Investment Summit that the start-up of the Shtokman project, which also involves France's Total (TOTF.PA) and Norway's StatoilHydro (STL.OL), would depend on the gas market.

"We need to see the economics and the long-term trend for the market. We are working in line with the market, not based on nice dates," Medvedev said.

Shtokman, in the Barents Sea, has enough reserves to meet the world's gas demand for more than a year. Gazprom and its partners are planning to take a final investment decision in the first quarter of 2010.

The $15 billion first stage is due to start producing pipeline gas for Europe in 2013 and start liquefying gas for export to the United States in 2014, producing a total of 23.7 billion cubic meters a year, around 5 percent of the European Union's current demand.

"The project is targeting not only the U.S. market, but also Europe ... (Low demand) was one of the reasons why we postponed Bovanenkovo," Medvedev added.

The launch of Bovanenkovo, another giant development on the Arctic peninsula of Yamal, was postponed this year by 12 months to 2012, as Gazprom expects export sales to fall 36 percent this year to $42.5 billion due to a steep fall in European gas demand.

But Medvedev said he saw Gazprom preserving its share of the market at 25 percent this year, and said he was still upbeat about Gazprom's ability to grab a third of Europe's market share by 2020 or even earlier.

Medvedev said Gazprom was in talks with South Korea's KOGAS to develop an LNG plant in the far eastern port of Vladivostok, which is due to be connected by pipeline to the Pacific island of Sakhalin.

"South Korea is very interested in the Russian pipeline and LNG. It is too early to talk about volumes, as we need to figure out what our resource base will be, as well as production costs," he said.

Medvedev also said talks with U.S. oil major ExxonMobil (XOM.N) on the purchase of its gas from the Sakhalin-1 project were progressing well, but declined further comment.

(Additional reporting by Michael Stott, Robin Paxton, Katya Golubkova, Tanya Mosolova, Vladimir Soldatkin and Gleb Gorodyankin)