Gazprom mulls plan to enter US LNG market

London (Platts)--19Jun2006

Russian gas giant Gazprom expects to finalize plans for entering the US LNG
market in the next three to six months, an official with Gazprom Marketing and
Trading said June 15.

"There are a number of different ways we could get into the US market," John
Hattenberger, LNG director of Gazprom Marketing and Trading, told Platts on
the sidelines of the Global LNG Financing Summit in Moscow.

One option would be for Gazprom to form its own US-based company and start
from scratch, as has been done in the UK, he said.

Another approach would be acquisition of a company with marketing and trading
activities in the US. "We've got a few acquisition candidates," Hattenberger
said, declining to name them.

Gazprom could also create "some form of joint venture," either temporary or
permanent, to market Russian LNG in the US.

He said Gazprom had received offers from companies shortlisted for the
Shtokman LNG project in the Barents Sea, as well as from third parties in the
US that may be involved in marketing LNG from the Shtokman field.

In September 2005, Gazprom narrowed the list of potential Shtokman partners to
five, including Norway's Statoil and Hydro, France's Total, and the US'
ConocoPhillips and Chevron, and is to make final selection of two or three
firms this summer.

LNG production is expected to start around 2011 at about 15 million mt/year,
to be supplied to the US. The Shtokman field's reserves are estimated at 3.7
trillion cubic meters.

"Our position is to compare offers from the shortlisted firms and offers from
third parties," Hattenberger said. He added talks were being held with US's
Sempra, as well as with a number of other companies which "we haven't
announced." Under a memorandum signed with Sempra in April 2005, the US firm
may provide its terminals for Russian LNG sales in the US.

Hattenberger said Gazprom did not plan to build its own US regasification
terminals, and instead expected to take long-term capacity in one or more
terminals under development.

He said Gazprom also hoped to make decisions on the Baltic LNG project near St
Petersburg by the end of 2006. "The project has so far moved more slowly than
we hoped. We're pushing ahead as quickly as we can. Our goal is to have by the
end of the year several partners, site selected, capacity selected and a
development plan," he said.?Anna Shiryaevskaya

In December 2005, a Gazprom official said the gas giant planned to decide on
the Baltic LNG project near St Petersburg during the first half of 2006.

The Baltic LNG project envisages a 5 million mt/year liquefaction plant on the
Baltic Sea near St Petersburg, to be developed with Petro-Canada and other
foreign partners. Start up of the project, which will use natural gas from
Russia's unified gas system, is planned for 2010, Hattenberger said.

Gazprom and Petro-Canada signed a memorandum of understanding in October 2004
to build the liquefaction plant.

Hattenberger said discussions on the project continued with Petro-Canada, as
well as with "a pretty long list of other companies," including BP. "We're
reviewing proposals," he said.

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