* Russia, West in standoff over Ukraine
* Rosneft building LNG plant with ExxonMobil
* Rosneft to launch plant by 2018-19, sees gas output up
(Adds details, background)
By Denis Pinchuk
MOSCOW, April 1 Russia's Rosneft, said
on Tuesday it was on track to start production at its first
liquefied natural (LNG) gas plant in the country's far east in
2018-2019, despite East-West tension over Ukraine.
The world's largest listed oil company by output signalled
its partnership with U.S. ExxonMobil for building the
plant, which will have an initial annual capacity of 5 million
tonnes, would not be affected by the standoff.
"The project is fully targeting Asia-Pacific markets. At the
moment, the project's implementation is going according to the
plans that were announced," Rosneft, headed by Igor Sechin, a
long-standing ally of Russian President Vladimir Putin, said in
written replies to Reuters.
"The launch is planned for 2018-2019," said the
state-controlled company, almost 20 percent owned by British oil
Rosneft said current LNG prices in Asia, at over $15 per
million British thermal units (MMBtu), would enable it to
successfully carry out its LNG project, in which the final
investment decision is expected next year.
Russia is entering the global LNG game at a time when Qatar,
Australia and others are boosting their presence on the market,
and prices are being driven by growing demand in the
Russia has only one LNG plant, which is controlled by
state-run top natural gas producer, Gazprom, and is on
the Pacific island of Sakhalin. It has an annual capacity of
around 10 million tonnes.
Tensions over Russia's annexation of Crimea from Ukraine,
following a referendum the West says was a sham, have pushed
East-West to their lowest level since the Cold War.
The United States and the European Union have imposed
sanctions, mainly on Russian individuals, and Moscow has
responded in kind.
Rosneft is one of two Russian companies that have won the
right to ship LNG out of Russia since the Kremlin decided to end
Gazprom's monopoly. The other is Novatek, which is
currently Russia's number two gas producer and is co-owned by
another Putin ally, Gennady Timchenko.
Timchenko is one of the Russian individuals targeted by
Western sanctions over the Ukraine crisis but Sechin has not
been targeted, nor has Gazprom's chief executive, Alexei Miller.
The tensions have spurred U.S. officials to press Washington
to speed up exports of U.S. natural gas to Europe to help reduce
the continent's reliance on Russian gas, which accounts for a
third of the EU's total consumption.
Rosneft said it did not expect all LNG plants announced by
Washington to come on stream, saying exports could hit domestic
gas prices and curb economic growth in the United States and
competition would come from Canada, with its own LNG plans.
"That said, a scenario when the bulk of the projects
announced are actually launched seems unlikely," Rosneft said.
Russia largely underestimated the shale gas revolution in
the United States which turned the country into the world's
leading gas producer, enabling it to overtake Moscow.
The United States is now set to become the world's largest
oil producer, thanks to increase in shale oil output, and Russia
is now testing its own unconventional oil prospects in western
Last year, Rosneft's gas production reached 42 billion cubic
metres (bcm), thanks to acquisitions. The company plans to
increase gas output to 100 bcm by 2020 in a move to become
Russia's second biggest gas producer after Gazprom.
On Tuesday, it said its gas output was expected to rise to
around 55 bcm this year and over 63 bcm next year. Gazprom
produced 479 bcm last year, or 73 percent of the Russian total.
(Reporting by Denis Pinchuk, Writing by Katya Golubkova,
Editing by Timothy Heritage and William Hardy)