UPDATE 1-Sakhalin-1 to sell 20pct of gas to Gazprom-report

MOSCOW May 5 The Sakhalin-1 consortium has agreed to sell 20 percent of the natural gas extracted from the large oil and gas project to Russian gas export monopoly Gazprom (GAZP.MM), Nikkei reported on Tuesday citing unnamed sources.

The price of the gas, which has been the main sticking point in talks over the sale, is still being negotiated, the Japanese business daily said in its issue due for publication Wednesday.

U.S. energy major Exxon Mobil (XOM.N) operates Sakhalin-1, on the Russian Pacific coast island of the same name, in cooperation with Russian state oil firm Rosneft (ROSN.MM), Japan's Itochu (8001.T), Marubeni (8002.T) and India's ONGC (ONGC.BO).

Gazprom spokesman Sergei Kupriyanov said he could not immediately comment on the report, as did a spokesman for state-controlled Rosneft. A spokeswoman for Exxon Mobil also declined to comment.

Gazprom has long said it needs the gas produced at Sakahlin-1 to cover domestic needs, while Exxon has long-stated it is looking for the best price, though has eyed major importer China for some time.

The project has been producing oil for several years and reached peak production of 11.2 million tonnes in 2007.

It has been producing gas since 2005 and shipping small volumes to continental Russia. It has signed a deal to supply China with 8 billion cubic metres (bcm) of gas a year and hopes to start the supplies next decade. (Reporting by Simon Shuster and Vladimir Soldatkin; Editing by Keiron Henderson)