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Vladivostok News: Pipelines’ ups and downs in Russia

4 August 2006

On Wednesday Khabarovsk Governor Viktor Ishayev met the president of Exxon Neftegaz Limited, Steve Terni, to discuss gas supplies to the Khabarovsky region under the Sakhalin-1 project, construction of the oil terminal in the settlement of De-Kastri and a possible gas pipeline to China.

Ishayev reported that the Khabarovsky regional government has an agreement with Exxon Neftegaz Ltd. according to which the region annually receives 2 billion cubic meters of natural gas, a press statement from his office said.

“The economically beneficial effect from natural gas coming to our region is obvious,” Ishayev said. He pointed out that in the city of Komsomolsk-on-Amur, 85 per cent of residents consume natural gas which is half- priced in comparison with liquefied gas. Ishayev lamented, however, that residential apartments in the city of Khabarovsk are not yet prepared to receive natural gas.

Ishayev and Terni also touched on a possible construction of a gas pipeline to China with a capacity of about 8 billion cubic meters of natural gas per year, the statement said.

Ishayev intends to sign off on permission for Exxon Neftegaz Ltd to visually conduct a preliminary study of the location for a possible gas pipeline route. Meanwhile, Russia’s state gas monopoly Gazprom intends to oppose Exxon’s plan to construct a gas pipeline to China as the company itself has developed a bigger rival project, Kommersant recently reported.

Exxon and its partners, which include state oil firm Rosneft and Japan’s Sodeco, are currently negotiating with China’s CNPC to build a $1 billion pipeline from Sakhalin.

Exxon’s pipeline “is not foreseen in the program of development of Russia’s Far East and East Siberia and does not meet the goal of development of a gas transportation system in the country’s east,” Kommersant quoted the Gazprom source as saying.

Pundits say that the rivalry among Russian state companies and two Sakhalin oil consortiums led by Royal Dutch Shell and ExxonMobil has led to more pressure on Sakhalin operators when on Thursday the Natural Resources Ministry’s environmental watchdog Rosprirodnadzor said it wanted Shell to freeze construction of pipelines on the Sakhalin-2 oil and gas project for ecological reasons.

Deputy Head of the Natural Resources Ministry’s ecological department Oleg Mitvol said that Shell should stop building onshore pipelines as they could be destroyed by mudflows, a press statement at http://control.mnr.gov.ru reported Thursday. Pictures of hazardous places with a total length of 20,000 kilometers are attached to the press statement.

Rosprirodnadzor will launch an inspection of the oil pipeline to check if it corresponds with Russia’s construction norms and regulations, Mitvol revealed. Sakhalin Energy at its official site www.sakhalinenergy.ru reports that the pipelines were approved by Rosprirodnadzor in 2003 and are well shielded from mudflows.

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