Gazprom to begin commercial production at Kirinskoye in October
YUZHNO-SAKHALINSK. June 28 (Interfax) - Gazprom , the operator of the Sakhalin-3 project, plans to begin commercial production at the Kirinskoye gas condensate field in October 2013, Sakhalin region Governor Alexander Khoroshavin said at a press conference on Friday.
"According to Gazprom plans, commercial production at the Kirinskoye gas condensate field is to begin this fall. They are planning on October," he said, adding that production might start up at a later date this year.
But Gazprom, which had previously planned to use gas from Kirinskoye to meet the needs of Russia's Far East regions, now believes it makes sense to continue that gasification effort using gas from the Sakhalin-1 and Sakhalin-2 projects, he said.
Associated gas from the Sakhalin-1 project is currently supplied to consumers in Khabarovsk territory and natural gas from Sakhalin 2 is supplied to consumers in Sakhalin region and Primorye. In accordance with the Eastern Gas Program, when commercial production at Kirinskoye begins, Sakhalin-3 gas is to completely replace Sakhalin-2 gas being supplied to Sakhalin region and Primorye.
Given that the date for commencing production at Kirinskoye is drawing near, Khoroshavin's administration asked Gazprom about future gas prices and volumes.
"The answer we got surprised us," Khoroshavin said.
Gazprom did not specify a price, but said gas from Kirinskoye would be significantly more expensive than the gas currently being extracted on Sakhalin's shelf. "For that reason, as the company said in its response, this gas is not suitable to supply the gasification effort, which should continue to be supplied with gas from Sakhalin-2. However, all of the Sakhalin-2 is already under contract and the state's share of profit gas is insufficient for gasification of the Far East," Khoroshavin said.
"They have told as straight out that this gas [from Kirinskoye] will not be used for gasification. So then, what gas will we use for that purpose?" he said.
The Sakhalin-2 gas being supplied to Primorye and Sakhalin region "is a fairly expensive indulgence" since the gas belongs to the project operator, which sells it to Gazprom at international prices. In order to bring the price down to the domestic level, the state subsidizes the price out of the royalties for Sakhalin-2, 100% of which are paid to the federal budget.
"That is, one of Russia's main taxpayers, Gazprom, which extracts gas for us under the Sakhalin-2 project, delivers it to Sakhalin and Primorye, on which it receives subsidies from the federal budget, as prescribed in a government resolution," he said.
"But that government resolution expires in 2014, which is why we asked Gazprom about gas from Kirinskoye," he said.
Khoroshavin said he wanted to know where gas from the Sakhalin-3 project would go. If to the future LNG plant in Vladivostok, "how reasonable and competitive is it to send expensive gas on an expensive pipeline to Vladivostok, where the LNG plant and shipping terminal have yet to be built? We have yet to receive answers to all these questions. I have well-founded suspicions concerning the quality of that Gazprom letter," Khoroshavin said.
"I get the impression that the response was written by an inexpert clerk and endorsed by company managers who didn't take a very close look at it," he said.
Khoroshavin said he would meet with Gazprom management next week in order to get answers to his questions.