Gazprom juggernaut heads for liquefaction, but Baltic decision unlikely in ‘07
At a press conference in London this week, Gazprom outlined its priorities over the coming few years, and LNG merited frequent mentions.
Sakhalin II was cited by Alexander Medvedev, deputy chairman of Gazprom’s management committee, and director general of Gazpromexport, as equal top priority for investment, along with the Nordstream pipeline project to Germany. The order of priority for Gazprom’s large infrastructure projects was determined by their stage of implementation, said Vlada Rusakova, a member of Gazprom’s management committee, and head of the department of strategic development.
“As you can well imagine, there will not be an inflow of resources into these projects at the same time. All these projects have an investment cycle spanning from seven to 15 years. Perhaps our top priority at present is the Nordstream project, which is at the investment stage, and also Sakhalin II. The other projects – for instance, Shtokman – are at the level of providing design documentation. Baltic LNG ... is still under discussion,” said Rusakova.
A senior Gazprom source told Heren Energy that the Baltic proposal –which Medevedev had previously said would see the final selection of partners in December 2007 – was now back with the board, and working through the internal system to determine “where the gas comes from, how much it costs, and so on”. As such, a decision to proceed was now unlikely before 2008, he said.
Under its existing contracts, Gazprom expects to export 200 billion cubic metres/year (Gm3/y) to Europe. By 2020, the company hopes to have increased that to 215-250 Gm3/y, including LNG and pipeline gas. “Everything will depend on the demand in the market, however,” said Rusakova.
But with Shtokman currently envisaged to start producing in 2013, and exporting in 2014, that target could easily be met earlier. “The design capacity of 70 Gm3 will be reached by 2020. The produced gas will be fed into the Unified Gas System and also for the production of LNG,” she added, but did not give a closer breakdown of how much gas would go into each export source.
Medvedev said a special purpose vehicle (SPV) including the Shtokman partners, Total and StatoilHydro, would be registered before the year is out: “The jurisdiction will be selected for this company in Zug, the Swiss canton. This is also where Nordstream has been registered. The next decision will be the investment decision ... in 2008 or 2009.”
Gazprom was tight-lipped on the progress of the $1.5 billion (EUR 1 billion) Kovykta asset-swap with BP. Medvedev declined to comment on rumours that BP’s stake in Atlantic LNG could be on the table: “We are still hopeful that the transaction will be completed by the end of the year. However, there is much work to be done along the road. We have an idea which assets are of interest to our company, and we do have assets that will be matched to the British assets. We would ask you to be patient, and wait for the result, and the process will be described in someone’s memoirs.”
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