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Shell tells Gazprom to expand LNG plant

LNG Industry,

Shell has warned Gazprom to expand the Sakhalin-2 plant, a joint venture between the two companies. The plant, on the Pacific Island of Sakhalin, is Russia’s only liquefied natural gas (LNG) project and currently generates 10 million tpy. Shell warns that if expansion fails to happen, then the project will fail to exploit a peak in gas prices. Head of Shell’s operations in Russia, Oliver Lazare, said: “I think if we go to the market now, this project will have very high credibility and if you go earlier [...] you can actually sell your gas in the market at an attractive price".

Gazprom has, however, struggled to find an adequate resource base for its production, following a failure to agree on price from ExxonMobil’s Sakhalin-1 plant. Gazprom's Sakhalin-3, which is set to commence the production of gas in October, is a potential target for sourcing gas, noted Lazare.

Russia President, Vladimir Putin has voiced his preference for LNG expansion into the Asia-Pacific markets, and has strongly encouraged the development of Russian LNG. However, Sakhalin-2, once one of the world’s most substantial LNG projects upon its launch in 2009, has been subordinated by projects in Qatar, Africa, Australia and now, as a future exporting hub, the US.

Edited from various sources by Ted Monroe

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