Gazprom wants to speed up Sakhalin-3

May 3, 2011 at 5:19 PM
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MOSCOW, May 3 (UPI) -- Russian energy giant Gazprom plans to speed up drilling at the Sakhalin-3 project to move natural gas quicker to Asia, a company official has said.

"We are going to drill the first production well this year in the Kirinsky field and next year we are going to be able to supply the gas into the pipeline system," Vsevolod Cherepanov, Gazprom's head of gas Russia, told the Dow Jones Newswires on Monday.

Sakhalin-3 sits off Russia's Pacific Coast. An estimated 2.25 billion barrels of oil and 1.7 trillion cubic feet of natural gas locked in the Sakhalin region. Most of it is in the Kirinsky that was initially scheduled to start producing gas in 2014.

Operations have been sped up to have the block producing by 2012, in a bid to feed gas into a new pipeline, currently under construction, from Sakhalin via Khabarovsk to Vladivostok, Cherepanov said. That same year, the Asia-Pacific Economic Cooperation summit is held and could open new market possibilities for Russian gas sold to Asia.

A 9-magnitude earthquake and tsunami March 11 resulted in a fallout at the crippled the nuclear power infrastructure in northern Japan, creating an energy deficit in the island nation.

With Japan expected to reduce its reliance on nuclear power following the crisis at the Fukushima Dai-Ichi plant, the region's demand for natural gas is to increase significantly.

A group of companies led by Gazprom are already selling LNG to Asian-Pacific markets from the Sakhalin-2 project, with talks under way to boost shipments to Japan, a Gazprom official told Britain's Daily Telegraph last month.

Cherepanov told Dow Jones that Japanese companies are in discussions with Gazprom to ship some of the hydrocarbons from Sakhalin-3 via liquefied natural gas tankers to Japan, which already is the world's largest importer of LNG.

China is another potential customer for the Sakhalin-3 project, Gazprom's attempt to diversify its export structure away from Europe as the continent tries to become less dependent on Russia and boosts its domestic renewable energy industry.

At the same time, Europe might want more gas in the mid-term future to make up for reactors that go offline. Germany is considering shutting its plant park down earlier than planned.

The recent developments place Russia in a better negotiating position with Europe.

Ever since a row over gas prices with Ukraine in 2006, the Kremlin has been accused of using its energy reserves as a political pressure tool.

The lack of trust has resulted in energy security conflicts, with Europe voicing its desire to import from alternative suppliers in Central Asia, and Russia threatening to supply Asia's emerging economies instead.

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