RUSSIA - Exporting LNG To USA.

Rosneft, Gazprom's main partner in the licence for the Shtokman gas field, estimates that development of this would cost about $20 bn for it to produce 8.7 BCF/d in LNG form for 25 years. Most of the LNG will go to the US, which must import 15 BCF/d of LNG to meet its energy needs by 2025.

Gazprom in early 2006 said it was to send at least six LNG cargoes to the US this year in a partnership with Shell. Gazprom entered the global LNG market last year when it sent two shipments to the US. The company does not produce any LNG of its own and acquired those cargoes in swap deals in return for pipeline gas deliveries in Europe. These two cargoes were delivered to an import terminal at Cove Point in Maryland on the US east coast where Shell owns regasification capacity. Gazprom has multiple LNG projects, all of which are set to come on stream at the end of this decade. Gazprom is keen on swaps to learn more about the LNG business

Shtokman is on the shelf of the Barents Sea beyond the Arctic Circle. Potential partners for Gazprom and Rosneft include Norsk Hydro (with extensive experience in Arctic conditions), ConocoPhillips (Phillips having developed the Japan-bound LNG export business in Alaska), Chevron, ExxonMobil, Shell and Total (see Vol. 63, Gas Market Trends No. 9).

Gazprom Deputy CEO Ryazanov on April 4 said Shtokman contained around 3.7 TCM of gas, more than 15% above the previous estimate of 3.2 TCM. Gazprom plans to pipe Shtokman gas 550 km under the sea to a facility on Russia's northern coast, which will turn it into LNG for shipment to the US market. It has said supplies from Shtokman could cover 10% of American LNG demand for more than 50 years. Ryazanov said: "We want our [Western] partners to give Gazprom participation in other assets - world class assets that allow us to become a global company". Gazprom's projects expertise department head Igor Meshcherin told reporters Gazprom was no longer required to ask the government to approve special tax conditions for Shtokman after the state scrapped export duties on LNG earlier this year.

Petro-Canada and Gazprom are were planning a $1.5 bn LNG plant near St Petersburg which would supply Petro-Canada and other customers by 2010. The preliminary work is to be completed by end-2006. Most of the LNG would be shipped to the planned Gros Cacouna re-gasification terminal in Canada owned by Petro-Canada and TransCanada. Teaming up with Gazprom will give the Gros Cacouna project a guaranteed gas supply. That facility, in Quebec, will supply up to 500 MCF/d of LNG gas to eastern Canada and the US north-east. Gazprom would initially supply all the gas for the plant. Ron Brenneman, chief executive of Petro-Canada, said the firm also wanted to invest in Russian gas fields.

Vedomosti business daily on July 25 reported that Gazprom was in talks to acquire a blocking stake in Yamal LNG, a firm with 1.2 TCF of gas. It said Gazprom's banking arm Gazprombank would acquire 25% plus one from Nikolai Bogachev, who controls Yamal LNG. Yamal LNG has a licence to operate one of the biggest gas fields in northern Russia, Yuzhno-Tambeiskoye. Gazprom has been consolidating its hold on domestic gas supplies by seeking deals with the few independent players in Russia to shore up its stagnating reserves. Yamal LNG's licence for Yuzhno-Tambeiskoye was previously owned by Gazprom affiliate Tambeyneftegaz. Vedomosti quoted a source at Tambeyneftegaz as confirming the stake would go to Gazprombank. The shares would change hands at a "symbolic price". Repsol of Spain has said it was considering setting up a JV with Tambeyneftegaz and Anadarko Petroleum for an integrated gas E&P and LNG project on Russia's Yamal peninsula.