Exxon, Rosneft to build LNG plant with Japanese, Indian partners - sources
* Exxon, Rosneft had initially planned to build LNG plant
* Russian firms face restricted borrowing abroad due to
By Olesya Astakhova and Denis Pinchuk
MOSCOW, Oct 23 (Reuters) - Russia's Rosneft and
U.S. ExxonMobil plan to build a liquefied natural gas
(LNG) plant in a consortium with Indian and Japanese partners,
spreading the estimated $15 billion cost, two sources familiar
with the talks said.
The four companies - Rosneft, Exxon, Japan's SODECO and
India's ONGC Videsh - are partners in the
Sakhalin-1 group of fields that will supply the gas, but Exxon
and Rosneft had initially planned to build the LNG plant without
the other consortium members.
As well as spreading the costs among more stakeholders, the
broader involvement of the participants may mitigate sanctions
Initially, Rosneft and Exxon unveiled their joint plans to
build an LNG production site in Russia's Far East to President
Vladimir Putin in 2013.
But production of the super-cooled, seaborne gas has so far
failed to materialise for many reasons, including international
sanctions against Moscow for its role in the Ukraine conflict.
LNG production itself is not subject to sanctions, but
Russian companies have limited access to financial markets due
to the restrictions. Exxon had to leave most of its other new
joint projects with Rosneft due to the West's punitive measures
Two sources - one person close to Exxon, and a high-ranking
Rosneft executive not authorised to speak publicly - said both
firms are committed to carrying out the LNG plant project within
the framework of the Sakhalin-1 agreement.
Sakhalin-1, a hydrocarbon project, is led by Exxon with a 30
percent stake. Twenty percent belongs to Rosneft, with the rest
split between SODECO (30 percent) and ONGC Videsh (20 percent).
"No one is interested in financing such a project alone,"
the source close to Exxon said. Asked how the LNG plant deal
would be structured, the senior Rosneft executive said: "It will
The sources did not say how the financing of the LNG plant
would be shared between the participants.
The source close to Exxon said a decision whether to go
ahead with the LNG project was expected in 2019, otherwise the
project risked losing its market amid growing competition.
Currently, two LNG plants, Novatek's Yamal LNG and
Gazprom's Sakhalin-2, are producing the frozen gas in
Russia, which has set an ambitious target of more than doubling
its global LNG market share to 20 percent in the next decade.
Sakhalin-1 is pumping close to 300,000 barrels of crude oil
per day, a record high, as well as natural gas that it has been
unable to sell abroad. Gazprom has the exclusive rights to
export pipeline gas from Russia.
Sakhalin-1 has to pump most of the gas back into the ground,
while a small amount goes to local customers in the sparsely
populated region. Decade-long talks with Gazprom and the
consortium over gas sales have not yet yielded any results.
Rosneft, ONGC and SODECO declined to comment. The Russian
Energy Ministry and the government also declined to make any
"The Sakhalin-1 consortium continues to explore every
opportunity to monetize Sakhalin-1 gas resources," an ExxonMobil
spokeswoman in Moscow said in emailed comments sent in response
to Reuters questions.
Igor Sechin, Rosneft chief executive, said in June that the
LNG plant would be built just across the Tatarsky strait in the
port of De Kastri in Russia's Khabarovsk region, where Rosneft
already has an export terminal for Sakhalin-1 oil.
Sechin said then that the plant's annual capacity was seen
at 6 million tonnes of LNG, with supplies aimed at starting in
2025. Gazprom's Sakhalin-2 has an annual capacity of 10 million
The source close to Exxon confirmed the technical plans for
the plant and said the project partners are considering the
option of laying a gas pipe along the existing oil pipeline from
Sakhalin-1 to the LNG plant in De Kastri.
(Additional reporting by Nidhi Verma in New Delhi and Osamu
Tsukimori in Tokyo
Writing by Katya Golubkova and Vladimir Soldatkin; Editing by
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