Russia should maintain Gazprom's monopoly on exports of Russian gas to Europe but allow other companies to export LNG to rapidly growing markets of the Asia-Pacific region, energy minister Alexander Novak said Saturday.
As Gazprom has the technical capability to increase pipeline gas supplies to Europe, it is not viable to send Russian LNG there, Novak told reporters at a briefing.
"But there is an enormous Eastern market where there is no pipeline. We need to establish all the possibilities for our gas to compete on those markets and allow other companies, apart from Gazprom, to act on this market," Novak said.
The ministry expects to submit its proposals on LNG export liberalization to the government for further consideration within a month, Novak said.
He noted that breaking Gazprom's monopoly on exports of Russian gas would require establishing mechanisms to coordinate the activity in order to avoid shortages of gas on the domestic market.
"There could be various ways of coordination, including a non-commercial partnership between gas players and issuing licenses to separate projects that would include LNG supply conditions," Novak said.
At the same time, he noted that although the ministry believes the liberalization of LNG exports would provide impetus for development of LNG projects in Russia, the government had not taken a final decision on whether or not to liberalize LNG exports.
In late 2012, Russia's second biggest gas producer after Gazprom, Novatek, applied to the government for permission asking to export LNG directly rather than through an existing agency agreement with Gazprom, which enjoys exclusive rights to export Russian gas, including LNG.
Novatek is trying to secure buyers as it seeks to raise the funds needed for the Yamal LNG project, estimated to cost more than $20 billion.
Novatek recently intensified talks with potential buyers of its LNG, although any final agreements depend on the government's decision on LNG exports.
Novatek said the Yamal LNG project was attracting interest from Japanese, Chinese and South Korean companies.
"There is high interest from Asian companies, both in securing future LNG supplies from Yamal LNG and [getting] a share in the project itself, Novak said.
During a visit to Japan last week, Novak, who was accompanied by Novatek CEO Leonid Mikhelson, among others, met with Tokyo Gas, Tokyo Electric, Marubeni, and Mitsui to discuss the project.
Novak reiterated that it was ready to reduce its current 80% stake in the project to 51% to attract new partners to Yamal LNG. France's Total holds a 20% stake in the project, which is expected to start up when a first, 5.5 million mt/year LNG train is operational by the end of 2016, to be followed by second and third trains of similar capacity by the end of 2017 and 2018, respectively.
