Experts “Gazprom” and “Rosneft” will agree on gas from the Sakhalin-1 only with cheap oil

MOSCOW, November 5. /Corr. Maria Todorova/. “Rosneft” will agree to sell to “Gazprom” gas project “Sakhalin-1” if world oil prices will remain low, and under these conditions “Rosneft” will not be able to implement your own project to liquefy natural gas on Sakhalin, far Eastern LNG. This opinion was expressed by the interviewed experts.

The operator of the first large-scale offshore project in Russia “Sakhalin-1” Exxon Neftegas, in which Rosneft owns 20%, many years trying to negotiate with Gazprom on gas deliveries from the project in the Asia – Pacific region. However, Gazprom has always insisted on supplying this gas to the domestic market.

The project “Sakhalin-1” (“Rosneft” – 20%, ExxonMobil – 30%, Japanese Sodeco – 30%, Indian ONGC – 20%), developed on the terms of the agreement on production sharing (PSA), provides for the production of hydrocarbons from three fields – Chayvo, Odoptu and Arkutun-Dagi located on the northeast shelf of Sakhalin island in the sea of Okhotsk.

Gazprom, in turn, is always initiated talks with Rosneft on gas sales from the project “Sakhalin-1” to liquefy it at its LNG plant is the only existing at the moment the LNG plant in Russia “Sakhalin-2” (operator Sakhalin Energy, where Gazprom has 50% +1 share, Shell – 27,5% -1 share, Mitsui – 12.5% and Mitsubishi – 10%). However, the negotiations always ended in vain, and at the end of 2014, Gazprom said it plans to involve the Ministry of energy of the Russian Federation to resume talks with Exxon Neftegas.

“In fact the parties rested their foreheads. “Gazprom” in “Sakhalin-2″, you need a source of gas, preferably cheap. But for Exxon and Rosneft is also very important that gas, because they want to build a liquefaction plant. While under the big question both projects”, – said the partner of analytical Agency Rusenergy Mikhail Krutikhin.

After failing to agree on export of gas, Rosneft in 2013 signed an agreement with one of its largest partners American ExxonMobil about the construction of a plant for liquefaction of gas with “Sakhalin-1”. The plant got the name “far Eastern LNG”, his power was declared at the level of 5 million tonnes of LNG per year. However, the plans for the construction of the plant has been removed. According to the latest data of Rosneft, the potential year of the launch is 2020.

Negotiations failed again

In September of the current year “Gazprom” has once again turned to “Rosneft” to sell gas, including for securing their export contracts. Gazprom may not have enough own resources to supply gas to China. Despite the fact that the leadership of “Rosneft” has repeatedly spoken on the topic of what the company can provide up to 18 billion cubic meters per year of gas supplies to China.

The parties began to discuss the price. “Rosneft” offered his own version. The President of “Rosneft” Igor Sechin in September said it was “export netback minus transport minus processing”. Gazprom ponders over this,” said Sechin.

A government report on the implementation of the PSA, signed on 23 October, a copy of which is available, contains the final on the moment the decision Exxon Neftegas that the price provided by the operator of “Sakhalin-2” Sakhalin Energy cannot “serve as the basis for successful cooperation between the projects “Sakhalin-1” and “Sakhalin-2”.

The report also stated that Exxon Neftegas Ltd. continues to count on joint with “Rosneft” the factory project “far Eastern LNG”. “However, the consortium of the project to date has not determined the final location of the construction of the far Eastern LNG plant”, – stated in the report.

Director East European Gas Analysis Mikhail Korchemkin said that the basis of the long conflict between Gazprom and Rosneft is a contradiction between the law on PSA, on the basis of which was created the project “Sakhalin-1”, and the law on gas exports, establishing export monopoly Gazprom. “Now part of the problem has been solved – the LNG export monopoly is not” – said the analyst. Therefore “Rosneft” and plans to build a plant to liquefy natural gas.

But agree possible

According to Krutikhin, the certainty with which the plant of the two can be built in the end, you may receive a “by the spring of next year.” “Then “Gazprom” will finish the analysis of the results of drilling of two more wells at the Yuzhno-Kirinskoye field, look at the shape of the reservoir, its Geology,” said he.

The Yuzhno-Kirinskoye field, developed by Gazprom, is currently under U.S. sanctions and the development of it is difficult. However, the field is a resource base for “Sakhalin-2”.

“Resources may not be sufficient. In order to run the plant for 5 million tons of LNG per year, you need something like 14 billion cubic meters of gas per year. Until we see such wells, are these amounts provided for third-line “Sakhalin-2”. For the project “far Eastern LNG” need the same amount. While they have the potential of production on “Sakhalin-1″ is 12 billion cubic meters per year. But there are prospects that gas production can be increased,” – said the analyst.

However, Krutikhin noted that “for administrative and other indicators on the” from “Gazprom” has an advantage”. “I assess the chances “Gazprom” on the construction of the third phase as 60% success, 40% Rosneft and Exxon,” he said.

Thus Raiffeisenbank analyst Andrei Polishchuk said that the issue of gas prices “Rosneft” “Sakhalin-1” depends on market conditions in General.

“The far East LNG project is currently unknown whether there will be built and when. 2020 is a conditional sentence, which would depend on the price of oil and gas. If oil prices will recover, “Rosneft” can decide on their own to implement the project,” he said.

According to Polishchuk, to agree on price – the “most logical solution”. “To build on the same spot another LNG plant is not so logical in terms of the economy. And the “Gazprom” problems with the resource base. And you can use the resource base “Sakhalin-1”, – believes the analyst.