1 Oct 2009 10:53

Gazprom could produce 17 mln tonnes LNG from Shtokman, Sakhalin-2 by 2020

YUZHNO-SAKHALINSK. Oct 1 (Interfax) - Gazprom plans to produce up to 17 million tonnes of liquefied natural gas (LNG) from the Sakhalin-2 and Shtokman projects by 2020, Alexander Medvedev, the Russian gas monopoly's deputy CEO, said at the Sakhalin Oil & Gas 2009 conference.

"We plan by 2020 to produce up to 17 million tonnes of LNG at those projects that are already being implemented, that is Sakhalin-2 and the Shtokman phase one," Medvedev said.

Medvedev said the global LNG market was growing rapidly, and could measure 500 million tonnes of LNG or 700 billion cubic meters natural gas by 2020. He said Gazprom expected to control 10% of that market. He said spot trading would rise to 23% from 14% of overall trading on that market by 2015.

Gazprom will produce LNG on top of the 17 million tonnes at other projects that are in the pipeline.

Medvedev said Gazprom intended to develop its LNG business in three areas: production, marketing and transport, and sales.

He said Gazprom had made 33 LNG spot deliveries since September 2005 and that sales had approached 3 bcm. Gazprom's own spot trading volumes could rise to 5-10 bcm by 2014. But the company also plans to sell LNG under medium-term contracts. "In time we plan to switch from spot to medium-term contracts," Medvedev said.

The Sakhalin LNG plant, Russia's first which was commissioned in February this year, "should hit design capacity [for 9.6 million tpa of LNG] in 2011," Medvedev said.

Japanese companies, including Tokyo Gas, Korean companies, including Kogas, and Shell and others have already bought this gas, he said.

The Sakhalin LNG plant is expected to produce 6 million tonnes of LNG this year. Japanese, Korean and U.S. companies have pre-ordered the bulk of the LNG that it expects to produce in the next 25 years.

The shareholders of Sakhalin-2 project operator Sakhalin Energy are Gazprom with 50% plus one share, Royal Dutch Shell with 27.5% minus one share, Mitsui with 12.5% and Mitsubishi Corp with 10%.