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Gazprom: Exxon, Conoco could join Yamal LNG

Hemscott: a Morningstar company

By Tanya Mosolova and Katya Golubkova

MOSCOW, Nov 18 (Reuters) – Russia’s Gazprom is considering U.S. majors Exxon Mobil and ConocoPhillips for its liquefied natural gas (LNG) projects in Russia’s Arctic Yamal region, its deputy chairman said on Tuesday.

Alexander Medvedev also said Conoco could gain access to gas deposits in Yamal in exchange for Russian gas export monopoly Gazprom joining gas projects in Alaska.

‘The list (of possible participants) is currently being made, but we do not exclude majors such as Exxon Mobil and Conoco from joining the project,’ Medvedev told reporters on the sidelines of a gas conference.

In the summer Gazprom said it saw Royal Dutch Shell as one of its potential partners in LNG projects in the gas-rich Arctic Yamal peninsula.

Time frames of potential projects are not yet known, though Gazprom has said it plans to produce the first 15 billion cubic metres of gas in 2011, gradually bringing output to 250 bcm a year or almost half its total output.

Gazprom, supplier of a quarter of Europe’s gas, holds around one-fifth of

global gas reserves, of which more than 10 trillion cubic metres, or one third, is on Yamal. The firm needs tens of billions of dollars to bring gas to its trunk pipelines.

In the last year Gazprom has wavered over whether or not to bring in foreigners to help develop the frozen peninsula.

ALASKA

Medvedev said Conoco could gain access to the Yuzhno Tambeisky gas deposits in Yamal.

His statements marked a major turning point in agreements between Gazprom

and the far northwestern U.S. state, which is divided from Russia by the mostly frozen Bering Strait.

Critics say the Alaskan gas pipeline, a project idea which has existed since the 1970s, will be too costly and has already faced severe delays due to revenue disputes.

But Medvedev said that while Alaska can pose technical challenges, it is not dissimilar from Russia.

‘Recently, we had a meeting with top managers of Conoco and outlined potential areas of cooperation. One of these areas (involves) the Arctic, both in the United States and Russia… they are very similar.’

Gazprom views Yamal as its key source of future gas output as production is falling at mature deposits in West Siberia. The firm has said new deposits on

Yamal and in East Siberia and the Russian Far East will account for half of its output by 2020.

Industry analysts say Yamal will dwarf Shtokman, another giant deposit located in the stormy Barents Sea, which will need at least $20 billion in investment.

Gazprom last year teamed up with France’s Total and Norway’s StatoilHydro

on Shtokman after more than 10 years of talks. Conoco had also wanted to participate.

(Writing by Amie Ferris-Rotman; editing by James Jukwey) Keywords: GAZPROM/CONOCO ([email protected], +7 495 775 12 42, Reuters Messaging: [email protected])

18  November  2008

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Copyright Thomson Reuters 2008.

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