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UPDATE 1-Russia's Rosneft says Gazprom hinders its LNG project
April 25, 2014 / 6:36 AM / 3 years ago

UPDATE 1-Russia's Rosneft says Gazprom hinders its LNG project

* Rosneft’s CEO Sechin says company needs to export gas

* Sechin says Gazprom, Shell deny Rosneft, Exxon access to pipeline (Adds detail, quotes)

By Denis Dyomkin

KHABAROVSK, Russia, April 25 (Reuters) - Rosneft ratcheted up pressure on fellow Russian energy champion Gazprom on Friday, asking the government to intervene in a row with the gas producer as Rosneft seeks to strengthen its control over vast hydrocarbon resources.

Rosneft, headed by Igor Sechin, a powerful ally of Russian President Vladimir Putin, has long challenged Gazprom’s monopoly rights to export natural gas via pipelines, which so far serve only clients in Europe, where Gazprom generates over half of its revenues.

On Friday, Sechin again called on the government to allow it to export gas via pipeline and asked for help in gaining access to Gazprom’s trunk gas pipeline, vital for the liquefied natural gas (LNG) project Rosneft is planning with ExxonMobil.

Sechin said that since Rosneft has large gas resources of gas in sparsely populated Eastern Siberia, it needs to sell the excess abroad.

“East Siberia has gas reserves in excess of 7 trillion cubic metres... And domestic demand has been limited so far. The task of expanding export capabilities arises in conditions like that, of course, including for independent (non-Gazprom) producers,” Sechin told a government meeting in the far eastern city of Khabarovsk.

Rosneft and Russia’s No.2 gas producer Novatek have secured rights to export seaborne LNG, successfully challenging Gazprom’s monopoly.

Gazprom still retains exclusive rights to export gas via pipelines, which so far have only been plugged to clients in Europe where the company generates half of its revenues.

Gazprom has been in talks for over a decade with China about selling it pipeline gas, but was unable to reach a deal due to differences over pricing. Sources said that the deal could be clinched in May when Putin visits China.

Rosneft has said it want access to a yet-to-be-built pipeline to China.

LNG PROBLEMS

Rosneft and ExxonMobil plan to build an LNG plant in Russia’s Far East to produce 5 million tonnes per year of the frozen gas starting from 2018. However, the project has been hindered by infrastructure bottlenecks and uncertainty over gas reserves.

Last week, Putin approved expansion plans for an LNG plant, operated by Royal Dutch Shell and majority-owned by Gazprom, on the Pacific island of Sakhalin.

Analysts have said that would hinder implementation of Rosneft and Exxon’s LNG project.

Sechin told the meeting, presided over by Prime Minister Dmitry Medvedev, that both Gazprom, a monopoly owner of trunk pipelines, and Shell were denying his company access to a pipeline from Sakhalin to the mainland for the LNG project.

“We believe those denials run counter to the law. We would ask you to provide support over the access (to the pipeline),” Sechin said. (Reporting by Denis Dyomkin; writing Vladimir Soldatkin; editing by Nigel Stephenson)

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