Four Announcements Show Russia Serious about LNG Exports
Three announcements regarding LNG show that Russia is finally taking concrete steps in the LNG business. Those three announcements are:
- Shell and Gazprom signed an MOU on July 7, 2005 in which they exchanged equity in two projects: Shell's Sakhalin 2 and Gazprom's Zapolyarnoye – Neocomian reserve development program. Gazprom will get 25% plus one share (a blocking minority shareholding) in Sakhalin 2 and Shell will get 50% of Zapolyarnoye – Neocomian. Valuations of the two projects will be made and adjustments for inequality for value will be made in cash. This move has the effect of vaulting Gazprom immediately into the LNG business with more credibility than the other projects Gazprom is prospectively developing (see below).
- Signing of an Memorandum of Understanding between Statoil, Gazprom and Rosneft regarding cooperation on the Snøhvit and Shtokmanovskoe gas fields and LNG exports;
- Joint venture between Trans-Canada and Petro-Canada to build an LNG regasification terminal on the St. Lawrence River at Gros Cacouna, Quebec. The LNG supplies will be arranged by Petro-Canada. Petro-Canada and Gazprom have signed an MOU to study building an LNG liquefaction facility at Ust Luga on the Gulf of Finland, near St. Petersburg, in Russia to supply Gros Cacouna.
- Lukoil has said that it is preparing plans to develop natural gas reserves in the Yamal area that would probably be part of an LNG export scheme to supply LNG regasification terminals in the US. ConocoPhillips, an active developer of regasification import terminals in North America, has recently acquired a 11.3% interest in Lukoil and expressed an interest in Russian LNG.
Gazprom has also announced that it is in discussions with BP on worldwide cooperation with BP regarding LNG. Those discussions appear to be in very preliminary stages. They could result in some agreements to swap Gazprom European gas deliveries by its existing pipeline infrastructure for LNG supplies to be delivered to non-European customers.
Russia has the world's largest resource base of natural gas. Until recently, Russian companies had only been considering how to enter the LNG business. The foregoing announcements indicate that concrete steps are now being taken by Russian companies with significant implications for the world LNG business.
Pan EurAsian's analysis of these announcements is available to subscribers to NATS: The North American Terminal Survey for LNG Imports and Regasification.
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Updated July 10, 2005