Gazprom Wants to Supply 15 Percent of World’s LNG

Russia’s state-owned energy giant Gazprom is planning to boost its exports of liquefied natural gas (LNG) to corner up to 15 percent of the world market for the fuel, CEO Alexei Miller said Friday.

The Russian gas giant is turning to lucrative Asian LNG contracts against a backdrop of growing domestic competition and falling demand among its mainstay European customers. It currently supplies just 5 percent of the world’s LNG.

Miller told the company’s annual shareholder meeting Friday that the company had agreed significant long-term LNG export contracts with South Korea and India last year.

“Our goal is to seize about 15 percent of the global liquefied natural gas market,” he said. “In the Asia-Pacific region we will grow our presence by increasing our own production of LNG.”

Gazprom plans to launch a large LNG plant capable of processing 15 million tons annually near Russia’s Far Eastern port of Vladivostok in 2018. There are also plans to build a similar plant on the Baltic Sea, and Miller said that the demand for LNG in Europe could also be exploited by Gazprom.

The shift in focus toward LNG comes after years of fruitless negotiations between Moscow and Beijing to build a pipeline and agree delivery contracts that would allow Gazprom to supply China, the world’s biggest energy market.

Gazprom is facing increasing competition from other Russian gas producers who received the support of President Vladimir Putin last week in their bid to end Gazprom’s legal monopoly on gas exports. On the same day that Putin threw his weight behind the campaign, fast-growing Novatek, one of Gazprom’s domestic rivals, announced a deal to supply at least 3 million tons of LNG annually to China from the company’s Yamal LNG project in northern Siberia.

Rosneft, Russia’s biggest oil producer, has also expanded its gas business in recent years and, according to some experts, is looking to replace Gazprom as Russia’s most influential energy company.

Miller attempted to put Rosneft in its place Friday, pointing out that Gazprom still contributed more to the Russian budget.

“In 2012 tax payments [by Gazprom] totaled 1.9 trillion ($58 billion),” said Miller, according to Russian media reports. “For reference: Rosneft paid 1.7 trillion rubles ($52 billion), which means that Gazprom was the country’s biggest taxpayer.”

rian.ru