Gazprom Sees LNG As Key To Its Future
Gazprom is looking to expand its holdings in LNG as Putin plans to triple its sales on the global market
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Gazprom Sees LNG As Key To Its Future
By Andy Tully
November 28, 2015 7:00 PM
The Sakhalin facility, which came on stream in 2009, has an capacity of producing 9.6 million tons of LNG per year. The company has three other such facilities in the works, but none has begun production yet.
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Now
Gazprom has agreed to buy all the LNG from an export plant in Cameroon
on Africa’s Gulf of Guinea. The plant is owned by the Anglo-French
energy concern Perenco and is being developed by the Norwegian shipping
company Golar LNG. The facility is expected to begin operations in 2017,
according to various news reports based on anonymous sources. Gazprom
Marketing & Trading (GM&T) will buy 1.2 million metric tons of LNG per year from the facility.
One
of Golar’s LNG tankers is being converted into a sea-borne production
platform where gas will be chilled into liquid form, making it ready for
quick transfer to other tankers for transport to markets around the
world. Reuters reports that its sources say Gazprom will sell the
product to markets on the Atlantic coast, as well as to China.
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How
profitable this will be isn’t yet clear. One of Reuter’s sources said,
“It all depends on the oil price in 2017 when the [Perenco] supply
starts flowing.” But Erik Stavseth, an energy analyst at Arctic
Securities in Oslo, told the news agency that a deal with Gazprom could
be beneficial to both Perenco and the Russian energy giant. “Despite a
low price on the volumes from Perenco to Gazprom, we see the project as
still delivering solid returns to Perenco – primarily due to the low
cost of gas,” he said.
Gazprom’s contract with Perenco includes no restrictions on where the gas may be sold.
Therefore any destination would be within the terms of the agreement,
whether in Latin America, North Africa or even in East Asia, which
Gazprom views as a rich source of customers.
One
leading Gazprom customer over the past five years has been India. But
Kelli Maleckar Krasity, a senior analyst at IHS Energy’s LNG group, told
Interfax that the company recently “has branched out to other markets –
Egypt, Argentina, South Korea – to increase its trading role.” He
believes that “One possibility for its Cameroon supply … would be
Brazil, since Golar has started a power initiative to connect end-market
consumers with suppliers, and it has contacts in the Brazilian market
that suggest LNG could flow there,”.
Meanwhile, Gazprom says it is also conducting a feasibility study on the possible construction of an LNG plant on the Black Sea.
Details are skimpy, and even the location of the plant hasn’t been
named, but Gazprom envisions a facility starting with a capacity of a
half-million metric tons of LNG, expandable to twice that volume.
Russian
President Vladimir Putin says his government plans to triple sales of
LNG on the global market, and to further expand gas sales in Asia. “We
plan to increase our supplies in the Asian direction from 6 percent to
30 percent – to 128 billion cubic meters,” he told the Forum of Gas
Exporting Countries in Tehran on Monday.
By Andy Tully of Oilprice.com
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Gazprom Sees LNG As Key To Its Future
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