Gazprom Objects to Export Plans for China

Russian natural gas giant Gazprom is urging the operators of the Sakhalin group to cancel plans to export natural gas from the project to China, claiming Russia needs the natural gas for its domestic needs.

While the natural gas supplies at the Sakhalin-2 project have already been sold under long term contracts, the Exxon Mobil-led Sakhalin group is still looking for customers for the supplies produced at Sakhalin-1, the only foreign project not under control of the government.

Exxon Mobil is in negotiations to sell the natural gas to China, which could complicate Gazprom's own plans to tackle the Chinese market.

Without control over the project, Gazprom officials are urging ExxonMobil not to export to China, claiming Russia's own citizens need the fuel.

Vladimir Kozlov, the head of Gazprom's Sakhalin office, said, "Russia's position as a partner in the production sharing contract is that Sakhalin-1 must prioritize the needs of Khabarovsk, Primorsk and Sakhalin regions," adding that Gazprom was prepared to offer Sakhalin-1 "commercially profitable gas purchase terms" (Isabel Gorst, Financial Times [subscription required], Sept. 4).

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