RUSSIA - Gazprom Exports Outside FSU Are To Average 130 BCM/Y In 2000.

With the biggest reserves of natural gas in the world, Russia's giant Gazprom plans to boost gas exports to markets outside the former Soviet Union (FSU) this year by 2.5% to 130 BCM worth about $9 bn, despite a 5% cut in its production to 520 BCM. Gazprom wants to remain the biggest gas supplier in Europe, Turkey and the FSU. Exports could exceed 385 BCM/year if by 2015 the markets have included China, Korea and Japan.

Gazprom has fought its way into Germany, the biggest market in Europe, by creating a supply structure parallel to that of Ruhrgas which dominates the German gas business. It did that with BASF unit Wintershall in a war of wits against both Ruhrgas and Norway, its most serious competitor in North West Europe. Gazprom has won the war, and now it is accounting for more than 40% of Germany's gas imports. In May 1998, Ruhrgas and Gazprom signed contracts for the supply of up to 13 BCM/year of Russian gas from 2008. The deal extended existing contracts until 2020. In another partnership agreement, Gazprom should be allowed to use Ruhrgas pipelines to supply gas to other countries in West Europe (see following).

VNIIGAZ, Gazprom's scientific and research unit, announced in early 1997 a plan for Russian gas production to reach 929 BCM/year by 2015, compared to 600 BCM in 1996, of which 39% would be exported. The increase will come from two areas to be developed in the coming years: Yamal, where production may begin in 2005 and reach 250 BCM/y by 2015; and Gydan, north of Yamal, to be developed after 2010 with output to reach 60 BCM/y by 2015. But so far the actual exports have fallen far short of this plan's forecasts. Thus it is likely that some of the future targets indicated by VNIIGAS would not be attained.

         RUSSIAN NATURAL GAS EXPORTS & PLAN TO 2015
            (BCM/Year)

           1990   1991  1992   1994    1996    1997    2000 2005-10    2015

To Europe   110   105    99   105.9   123.9   116.8   192.4   232.5   232.5
To FSU       92    90    90    78.8    73.2    73.1    86.3   127.5   127.5
Total       202   195   189   184.7   197.1   189.9   278.7   360.0   360.0

Source: VNIIGAS, January 1997.

For the Far East, Russia has lined up several ventures off Sakhalin island which will be producing oil and gas in partnership with foreign companies, with a Shell-led Sakhalin venture already producing and exporting oil. Most of the gas would be sold to Japan, by pipeline and in LNG form. The huge gas reserves of Irkutsk (east Siberia) and Yakutia (Sakha republic) are to be developed for their closest non-FSU markets: China, Korea and Japan, to be supplied by pipeline. Gazprom and India's Gail are consider-ing a 1,500 km, 25 BCM/y gas pipeline across the Arabian Sea to connect Iran's offshore South Pars field with India. Gazprom and Petronas are partners in two South Pars phases operated by TotalFinaElf.

According to VNIIGAZ, production of gas by the oil industry is to rise from 25 BCM in 1996 to 75 BCM in 2015. A number of processing plants will be built, allowing recovery of associated gas previously flared. Small gas producers would have access to Gazprom's high-pressure transmission lines, allowing them to market their gas within and outside Russia. Oil production would stabilise and may recover within the period to 2015, which would make additional quantities of associated gas available for export by various producers in Russia (see profiles of the oil & gas producers in OMT & Gas Market Trends No. 7).