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Timoshilov discusses LNG approach in eastern Russia

LNG Industry,

Viktor Timoshilov, Deputy Head of the Project Management Department, Head of the East-Oriented Project Coordination Directorate at Gazprom, reported on the company’s approach to planning and executing major gas projects in the Far East at the 18th Annual Conference ‘Sakhalin Oil & Gas 2014’.

Viktor Timoshilov.

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. 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 begun the gasification of the Sakhalin Region, the company has supplied the local consumers with over 1.2 billion m3 of gas.

Mr Timoshilov discussed Gazprom’s effort to boost the LNG industry in the Far East of Russia. In 2009, the first Russian LNG plant was put onstream in Sakhalin as part of the Sakhalin II project, with Gazprom being the majority shareholder. Possible ways of expanding the plant infrastructure are currently under consideration. The final investment decision has been made and the plant design is being developed within the Vladivostok LNG project.

Rosneft has declared its intention to build an LNG plant – Far Eastern LNG – within the Sakhalin I project, which is 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,” said Mr Timoshilov. This deal would help to make the most of the existing liquefaction infrastructure in Sakhalin and to produce LNG with enhanced competitive ability for the market instead of building another greenfield LNG plant. It is possible to reach a synergy from coordinated actions of the parties involved in two PSA projects through a gas purchase and sale scheme.”

Coordination of LNG projects in the region

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

It is also important to instil motivation for gas producers in the Far East in order to secure the success of gas projects in the region. “All efforts should be made to set up the real sector of economy and to support the new industrialisation process in the region,” said Viktor Timoshilov.

Adapted from press release by Ted Monroe

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