Russia's Rosneft, the world's top listed oil producer, wants to supply gas in parts of Europe where Gazprom is not present - or Moscow risks losing the market to US liquefied natural gas (LNG), a Rosneft executive said. Gazprom, the leading global gas producer, enjoys monopoly rights on gas pipeline exports. It has lost its exclusive rights to ship seaborne LNG overseas to Rosneft and Novatek, Russia's largest non-state gas producer.
Rosneft, headed by Igor Sechin, an ally of President Vladimir Putin, has long been vying for pipeline gas exports as it strives to grow globally. It now wants permission to export to the parts of Europe in which Gazprom does not operate. The Russian producer has a memorandum with BP, which owns a 19.75 stake in the Russian company, to trade up to 20 billion cubic metres (bcm) of gas annually in Europe.
Rosneft vice president Vlada Rusakova, a former Gazprom executive, said the company wants to conduct "an experiment" in supplying gas to new markets "in coordination" with Gazprom. "We are not counting on a total lifting of export restrictions. This would be harmful for Gazprom, especially against the background of a difficult financial and economic situation at the company," she said in emailed comments.
She added that as part of the "experiment", Rosneft could supply gas to markets where Gazprom is not present and into which US LNG could be imported. Rusakova did not identify any such European countries. "Of course, this should be done in close coordination with Gazprom, in order to avoid competition between Russian gas suppliers." Gazprom targets $32-34 billion in revenues from exporting more than 180 bcm to Europe and Turkey this year. Rosneft produced almost 70 bcm of gas last year, earning 208 billion roubles ($3.5 billion) in revenues from gas sales at home.
NEW MARKETS Rosneft, like Novatek, is winning some of Gazprom's clients at home thanks to a more flexible gas pricing policy. But unlike Novatek or Gazprom, Rosneft plans to have an LNG plant only in Russia, as it eyes Russia's far east and Asian markets. The company wants to export gas to China, where Gazprom plans to start shipping gas in 2019-2021 via the Power of Siberia pipeline, currently under construction.
It also wants access to China's domestic gas market and end-users via swap deals.
"There are significant gas resources in Russia's east, while no infrastructure has been built. And that's why we are interested in gaining access to the future Power of Siberia pipeline," Rusakova said.
Rosneft plans to produce 100 bcm of gas per year by 2020 and become the world's third-largest producer of natural gas sometime later, thanks to a number of international projects. Last year, Rosneft agreed to buy a stake of up to 35 percent in Egypt's Zohr offshore gas field from Italy's Eni. The Russian company also plans to expand in gas projects elsewhere, including Mozambique and Venezuela. Rusakova said Rosneft and Venezuelan state company PDVSA may consider building an LNG plant in Venezuela.