Gazprom moves into LNG with swap deal

Russian gas monopoly Gazprom moved a step closer on Monday to the booming liquefied natural gas business by clinching its first LNG swap deal and naming nine possible partners for a giant field.
Gazprom's British-based marketing and trading arm said it had bought an LNG cargo from BG Group to deliver it to a US receiving terminal at Cove Point, Maryland where Royal Dutch Shell holds regasification capacity.
"With this first LNG cargo delivery into the United States, Gazprom has taken the first step towards becoming a leading LNG supply, shipping, and marketing company," a statement said.
"Gazprom is now focusing on its strategic goal to expand its LNG marketing and trading activities in the coming months and years in preparation for the first availability of Russian-produced LNG in a few years time," the statement added.
The first cargo will be delivered at the beginning of September on an ex-ship basis.
Gazprom, the world's largest gas producer which supplies Europe with a quarter of its gas needs via major pipelines, is keen to supply gas to US markets, but as yet has no LNG facility to super-cool its gas for tanker shipment.
By 2009, Gazprom wants to have its own LNG terminal in the Baltic port of Ust Luga near St Petersburg, which could receive output from existing pipelines. It also wants to buy 25 percent in the Shell-led Sakhalin-2 project near Japan, which will begin massive LNG shipments in mid-2008.
Another option would be an LNG plant for the giant offshore Shtokman field in the arctic Barents Sea.
LNG is gas cooled to minus 259 degrees Fahrenheit (minus 162 Celsius) into a liquid, which shrinks to less than 1/600 of its original volume. Once it arrives at a regasification terminal, it is returned to a gaseous state and fed into pipelines.
Gazprom Marketing and Trading also said it had hired John Hattenberger, previously senior vice-president at US Marathon International Petroleum, as a new director of LNG.
On Monday, Gazprom said it had received proposals from nine global majors to help it develop Shtokman.
A Gazprom official told Reuters proposals had been submitted by US firms Exxon Mobil, ConocoPhillips, and Chevron, France's Total, Japan's Sumitomo and Mitsui, Norway's Statoil and Norsk Hydro, and Royal Dutch/Shell. US energy firm Sempra has also offered co-operation but did not apply for partnership on Shtokman.