Gazprom aims for 10 percent of U.S. natgas market in 10 years

NEW YORK (Reuters) - Russian gas giant Gazprom (GAZP.MM) plans to gain a 10 percent share of the U.S. natural gas market in ten years, a top U.S. executive told Reuters Television on Tuesday.

The intended share would total 6 billion cubic feet of gas per day, said John Hattenberger, president of Gazprom Marketing & Trading USA, and deals to increase existing supply will be signed shortly.

"We expect to sign another deal this week, with one or two to follow in two to three months," Hattenberger said.

Gazprom's U.S. arm began trading and marketing gas in the United States on October 1, with more than 350 million cubic feet (mmcf) of physical gas supply per day.

A top Gazprom executive recently said that the 6 bcf per day volumes could be reached within 5 years.

Deals to increase existing supply in the U.S. market will be signed with U.S. gas companies in the coming months, including one expected this week, Hattenberger said.

"Supply could easily become 500 mmcf per day and could be larger than that," he said.

Gazprom on Tuesday announced a gas swap agreement with French utility EDF (EDF.PA) under which Gazprom will supply 50 mmcf per day of gas to EDF in Britain and EDF will supply the same amount to Gazprom in the U.S.. This deal is included in the original 350 mmcf per day of Gazprom supply.

Future deals will be similar to the EDF deal, Hattenberger told Reuters.

"The deals are with U.S. companies who have strong gas positions in North America and have small or no gas positions in Western Europe which they would like to increase," he said.

LNG VS. SHALE

Liquefied natural gas is expected to play a role in Gazprom supply to the United States in the long term, from the existing Sakhalin 2 project in Eastern Russia and the planned Shtokman project in the Arctic.

LNG will be supplied at first to the Costa Azul terminal in Baja, California, where Gazprom has import capacity, which is connected to the Southern California gas market via pipeline.

However, Gazprom does not intend to send any cargoes to the United States in the next few months, because U.S. gas prices are lower than more attractive markets in Europe and Asia.

"It is pretty clear that we will not be sending any cargoes to the U.S. for the next few months," he said.

The U.S. gas market is facing a bearish mix of ample supply, from a rise in unconventional gas production, low demand and record-high inventories.

Hattenberger was cautious about the future of unconventional production like shale, which could see the U.S. with comfortable supply for many years to come, reducing its need for imports of LNG.

"The industry has applied the technology effectively in the Barnet Shale and others, but there is a big difference between flat land in Dallas with plenty of water and a receptive audience and drilling in the Appalachian Mountains in Pennsylvania where there is no water, no access to pipelines and environmental sensitivity," he said.

(Additional reporting by Anna Driver in Houston and Rhonda Schaffler in New York; Editing by Marguerita Choy)