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No point for LNG to rival Gazprom piped exports -Russia energy min
November 1, 2013 / 3:31 PM / 4 years ago

No point for LNG to rival Gazprom piped exports -Russia energy min

* Minister welcomes LNG exports to markets without Gazprom piped supply

* Novatek has signed its first European LNG deal with Spain

* Novatek, Rosneft expected to be allowed to export from 2014

* Russia liberalising LNG exports, targets bigger market share

By Katya Golubkova

NEMCHINOVO, Russia, Nov 1 (Reuters) - As more Russian companies begin exporting liquefied natural gas (LNG) there would be no point in them targeting markets where Gazprom’s exports gas by pipeline, Energy Minister Alexander Novak said on Friday.

The government this week backed a plan to allow companies other than Gazprom to export LNG and President Vladimir Putin is expected to sign it into law by January 1, 2014.

Novatek, whose co-owner Gennady Timchenko pushed for liberalising LNG exports, on Thursday signed a deal to sell 2.5 million tonnes annually to Spain beginning in 2016.

The move surprised some analysts who expected Novatek and Rosneft to focus on Asia instead of Europe, where piped gas from Gazprom accounts for a quarter of the market.

“There is no point to compete with Gazprom’s pipeline gas (but) in Spain, there is no such gas,” Novak said. “We see nothing dangerous if our companies enter such markets.”

“There is nothing about the markets in the law, the law only determines the criteria for licence holders who are eligible to export gas,” he said.

Under Russia’s draft proposal, companies that hold licences to build LNG plants would be allowed to export or to send gas for liquefaction to a plant determined by the government.

It proposes allowing LNG exports by companies with state holdings of at least 50 percent - if they send LNG abroad from offshore fields or from production-sharing agreements.

Russia currently has just one LNG plant, on the Pacific Island of Sakhalin, with an annual capacity of 10 million tonnes. It is operated by Gazprom, Royal Dutch Shell, and Japanese companies Mitsui & Co. and Mitsubishi Corp..

Novatek, Russia’s No.2 gas producer, is building a liquefaction plant in the Arctic with France’s Total and China’s CNPC which is expected to come on stream by 2017.

Rosneft plans its own plant on Sakhalin with U.S. company ExxonMobil.

Gazprom is the world’s largest gas producer, but new finds, production of shale gas and the shipping of super-cooled LNG threatens to bolster competition from the United States, Australia, Qatar and elsewhere.

The company plans to set up a new LNG plant in Russia’s Far East and has considered Baltic LNG to target European markets.

Russia aims to double its market share in LNG to 10 percent by 2020, producing 35-40 million tonnes annually.

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