Gazprom: Major gas projects in the Far East require broad approach

Viktor Timoshilov, Deputy Head of the Project Management department of Gazprom, reported on the comprehensive approach to planning and executing major gas projects in the Far East during the 18th Annual Conference “Sakhalin Oil & Gas 2014.” 

He noted that Gazprom had been active in running projects within the Eastern Gas program since 2007. During these years natural gas has arrived in Kamchatka, south of the Sakhalin Region and the Primorye Territory. The work is underway on gasification and gas supply to the northern and central parts of Sakhalin. Until the end of 2014 gas supply facilities will be commissioned in the Nogliki District. Since 2011 when Gazprom started the gasification of the Sakhalin region the company has supplied the local consumers with over 1.2 billion cubic meters of gas.

Viktor Timoshilov paid special attention to boosting the LNG industry in the Far East of Russia. In 2009 first Russian LNG plant had been put onstream in Sakhalin within the Sakhalin II project, with Gazprom being the majority shareholder. Possible ways of expanding the plant infrastructure are being considered. The final investment decision is made and the plant design is being developed within the Vladivostok LNG project.

In parallel, Rosneft declared an intention to build an LNG plant – Far Eastern LNG – within the Sakhalin I project being implemented by an international consortium on the PSA terms. “To avoid the unnecessary budget overruns, the more so they are covered by the state budget, Gazprom proposed the Sakhalin I project operator to sell its future LNG volumes to the company on an arm’s length basis. This deal would help to make the most of the existing liquefaction infrastructure in Sakhalin and to produce liquefied natural gas with enhanced competitive ability for the market instead of building another greenfield LNG plant. It’s possible to reach a synergy from coordinated actions of the parties involved in two PSA projects through a gas purchase and sale scheme,” said Viktor Timoshilov.

Compromising solutions, cost effectiveness and productive coordination of LNG projects across the region can be achieved through managing the overall balance of Sakhalin gas, and Gazprom acting as the Eastern Gas program coordinator should be responsible for shaping this balance.

It is also important that a motivating environment should be created for gas producers in the Far East to ultimately secure the success of gas projects in the region. “All efforts should be made to set up the real sector of the economy and to support the new industrialization process in the region,” said Viktor Timoshilov.

Press Release, September 25, 2014; Image: Gazprom