* Law expected to come in force in 2014
* Russia has 4.5 pct of global LNG market
* Seeks to double market share by 2020
* Rosneft, Novatek pre-sold some LNG from future plants
By Katya Golubkova
MOSCOW, Nov 15 Russia's lower house of
parliament took a first step on Friday towards allowing rivals
of state-controlled Gazprom to export liquefied
natural gas (LNG), as the world's top energy producing nation
stakes a claim to growing Asian markets.
The bill would open the door for Russia's top independent
gas firm Novatek and state oil major Rosneft
to break Gazprom's monopoly on gas exports - but only for the
supercooled gas that is shipped by tanker.
It passed by an overwhelming majority at the first reading
and is expected to clear parliament quickly. Depending on when
President Vladimir Putin signs it, the measure may take effect
Prime Minister Dmitry Medvedev, a former Gazprom chairman,
told the government last month that the export reform would give
"a new chance for the whole energy industry and allow us to gain
a footing" in fast-growing Asian markets.
Gazprom, descended from the Soviet gas ministry, has had its
export monopoly enshrined in law since 2006. It sells gas mainly
by pipeline to Europe and, despite years of talks, has failed to
clinch an export deal to China.
It has also been slow to adopt new gas technology, only
entering the LNG business in the past decade by buying into the
Royal Dutch Shell-led Sakhalin-2 project, on the
Pacific island of Sakhalin close to Japan.
Because of Sakhalin-2, Russia now has a share of around 4.5
percent of the global LNG market, which is dominated by Qatar.
Russia aims to double its share by 2020 to produce 35 million-40
million tonnes a year by then.
Industry analysts say Gazprom has been reluctant to embrace
change because of the risk that its existing business would be
cannibalised by LNG, which in contrast to pipeline gas can be
delivered to multiple destinations.
"This law is essential for as many players as possible to
enter the market in addition to Gazprom," said Alexei Kokin, an
energy analyst at Moscow brokerage Uralsib. "It would have been
better if it had been passed a year or two ago."
Russia's first new plant, the Novatek-led Yamal LNG, is due
to come on stream in 2016 and produce 5 million tonnes - lagging
new supplies from Australia and the United States expected to
reach the Asian market.
"Major Australian projects should start to hit the market in
the second half of 2014, but we continue to see a dearth of
new liquefaction projects coming online until 2015," BofA
Merrill Lynch said in a note this week.
Both Novatek and Rosneft have already pre-sold LNG from
their planned plants to Asian buyers, teaming up with other
energy majors like ExxonMobil, Total or China
National Petroleum Corp.(CNPC) to share costs and deploy
"We are not going to compete with Gazprom in Europe,"
Gennady Timchenko, a co-owner of Novatek, has said of the Yamal
LNG project on the Yamal peninsula north of the Arctic Circle.
BUYER IS KING
Russia has ceded its position as the world's top gas
producer to the United States, which is undergoing an energy
revolution in which wells are 'fracked' to release gas trapped
in non-porous rocks such as shale.
With the U.S. gas market now in surplus and prices
depressed, the industry has pushed for the right to export to
higher-priced foreign markets such as Japan, facing an energy
shortage following the Fukushima nuclear disaster of 2011.
Industry experts say U.S. exports of LNG could start in
2015, competing with Qatar, Malaysia and Australia and bearing
down on international prices.
The bulk of new projects are targeting Asian markets, where
Japan is the world's top LNG importer.
China, which is the world's top energy user and is keen to
curb use of dirtier coal, will likely triple the use of natural
gas to top 300 billion cubic metres (bcm) by 2020 and nearly a
third of that would be imported.
In a sign of intensifying competition, Qatar recently cut
its prices, while over $190 billion of LNG export projects under
construction may help Australia become the world's top exporter
before the end of the decade.