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Russia resists Exxon's plans to sell Sakhalin gas to China

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Russia's deputy energy minister backed energy giant Gazprom's request to prevent U.S. oil major Exxon from selling natural gas from the Sakhalin-1 project to China, saying the gas must meet domestic needs.
MOSCOW, June 19 (RIA Novosti) - Russia's deputy energy minister backed energy giant Gazprom's request to prevent U.S. oil major Exxon from selling natural gas from the Sakhalin-1 project to China, saying the gas must meet domestic needs.

Andrei Dementyev said at a Far East development meeting chaired by Prime Minister Mikhail Fradkov: "Sakhalin gas is meant for Russian consumers - without this gas there will be no regional balance."

A senior Gazprom official had told the meeting that if Exxon's Russian arm Exxon Neftegas, which holds a stake in the Sakhalin-1 project in the country's Far East, exported the gas, Russia would be hit by a domestic shortfall.

Gazprom, which already has a controlling stake in another oil and gas project off the Far East island, Sakhalin-II, has been hoping to obtain a license for a similar upcoming project, Sakhalin-III.

"We will not carry out any other gas projects except Sakhalin until 2011," Dementyev said, adding that the Industry and Energy Ministry saw no alternative to Sakhalin gas for supplying the Far East.

He said that under Russian laws, any operator can supply gas to any domestic consumer, but gas exports fall under strict rules.

Exxon Neftegas Limited holds a 30% stake in the Sakhalin-1 production sharing agreement. The other shareholders are state-owned Russian oil company Rosneft (20%), India's ONGC (20%) and Japan's Sodeco (30%).

Potential recoverable reserves at Sakhalin-I, which includes three large gas fields off northeast Sakhalin, amount to 485 billion cubic meters of gas.

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