Regional LNG: ExxonMobil, CNPC in talks on Russia's Sakhalin gas
Tuesday, May 24 2005 - 07:28 AM WIB
Ivan Malakhov, governor of Russia's eastern Sakhalin island, was quoted as saying Exxon was considering selling up to 8 billion cubic meters of gas a year from its Sakhalin-1 field.
?Last year, during our visit to China we sat down at the negotiating table with the Sakhalin-1 operator and China National Petroleum Corporation,? Malakhov said.
?Since then Exxon has held several rounds of talks with CNPC as the currently most realistic buyer of natural gas from the Sakhalin-1 project,? he said, adding that the negotiation process ?was at a pretty good stage.?
Exxon leads Sakhalin-1 with 30 percent, while another 30 percent is with a group of Japanese companies. India's state oil firm ONGC owns 20 percent and Russian state oil firm Rosneft has the remaining 20 percent.
Exxon, which has long favored a pipeline to Japan from Sakhalin-1, was not immediately available for comment.
Experts have doubted the plan, saying that Japan is not used to working with pipeline gas and prefers liquefied natural gas (LNG) deliveries.
Exxon's rival Royal Dutch/Shell will build the world's largest LNG plant on Sakhalin to supply consumers in Japan, South Korea, the United States and other countries from 2007 from its Sakhalin-2 project.
Exxon's Sakhalin-1 will produce the first oil in 2006 but has yet to find customers for its gas as it rules out building an LNG plant.
Malakhov said the regional administration would welcome the plan to sell gas to China.
?This is a big breakthrough for the gas component in the Sakhalin-1 project, as in the past years the consortium announced that it does not plan to consider the gas component earlier than 2012,? said Malakhov.
?We were not happy with this position, as it was pushing back the payback period of the project,? he said, referring to a production sharing agreement between Russia and Exxon. (*)