September 4, 2007 / 3:20 PM / 12 years ago

Exxon in talks with Gazprom on Sakhalin gas sales

An aerial view shows the Yastreb (Hawk) land rig at Sakhalin-1's Chaivo field, some 621 miles north of Yuzhno Sakhalinsk, Russia, October 10, 2006. Exxon Mobil Corp. is in discussions with Russia's Gazprom about the sale of gas from the next phase of Sakhalin-1, Robert Olsen, chairman and production director at Exxon Mobil said on Tuesday. REUTERS/Sergei Karpukhin

ABERDEEN (Reuters) - Exxon Mobil Corp. (XOM.N) is in discussions with Russia’s Gazprom (GAZP.MM) about the sale of gas from the next phase of Sakhalin-1, Robert Olsen, chairman and production director at Exxon Mobil said on Tuesday.

Exxon Mobil, an operator of the Sakhalin-1 project, established the first oil production from it at the end of 2005 and hit its plateau production in March this year, he said.

The next phase is a significant expansion of gas production from the first stage of the project.

“We’re in discussions with a variety of parties as to how best that might be done, no decisions have been made, no options ruled out.”

Olsen, who was speaking to journalists at the OffshoreEurope oil industry conference, said Exxon Mobil currently sells some gas into the domestic market on the mainland of Russia.

Exxon has looked at selling some of the gas to China and also Japan and India as liquefied natural gas.

Gazprom, which has monopoly right to export Russian gas, asked the government in June to block these plans, saying they would create a shortage on the Russian domestic market.

“It’s been well chronicled that Gazprom has an interest in participating in one form or another in how that gas is disposed and handled,” Olsen said. “And we are in discussions with Gazprom.”

Gazprom last year obtained control over nearby Sakhalin-2 project, forcing the previous operator Royal Dutch Shell (RDSa.L) to cede after months of state pressure.

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