Russian LNG Aims Face Big Challenges in Arctic Regions

Russia, the world’s biggest gas producer, has invited international energy majors to help it realize its ambitions to conquer one-fifth of the global market for liquified natural gas by 2020, but experts say it could be more than a decade before new production comes onstream.

Russia says it wants to beef up shipments of liquified natural gas, or LNG, to Asian and U.S. markets at the expense of pipeline deliveries to Europe, which are threatened by questions over demand and ongoing transit issues with neighboring Ukraine.

State-run gas giant OAO Gazprom has invited foreign energy firms such as Royal Dutch Shell PLC, Exxonmobil and ConocoPhillips as minority partners to develop costly new projects in Russia’s Arctic regions.

Russia’s priority project, the massive Shtokman offshore field in the Barents Sea north of Murmansk — a joint project with France’s Total S.A. and Norway’s StatoilHydro — is slated to start deliveries of LNG in 2014, but many experts question Gazprom’s financial and technical ability to realize such a project on time amid a recession.

Rigzone