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Gazprom unveils $38-billion gas project to conquer Asia

A gas pipeline under construction near Vladivostok, Russia. Gazprom plans a $38-billion (U.S.) project to ship Siberian natural gas to Vladivostok for export to China, Japan and other Asian markets.

Yuri Maltsev/REUTERS

Russia's Gazprom committed more than $38-billion (U.S.) to develop an East Siberian gas field and build a pipeline to the Pacific port of Vladivostok to lessen its reliance on exports to Europe and develop Asian markets.

Russian President Vladimir Putin has ordered Gazprom, the country's pipeline gas export monopoly, to forge close ties with fast-growing Asia Pacific consumers, such as China and Japan, to offset sagging demand in Europe.

On Monday, Gazprom chief executive officer Alexei Miller told Mr. Putin the company would invest 770 billion rubles ($24.5-billion) to build the 3,200-kilometre pipeline from the East Siberian Chayanda deposit to Vladivostok.

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He said 430 billion roubles ($13.7-billion) would be invested in development of the field.

"We can create another exporting centre oriented to Asia-Pacific region," Mr. Putin said, adding that the East Siberian region has huge gas resources.

Gazprom, in partnership with Japanese companies, plans to build a liquefied natural gas (LNG) plant in Vladivostok, which may come on-stream by 2020 with annual production of between 10 million and 20 million tonnes.

Mr. Miller said the pipeline was expected to connect Vladivostok in 2017 with the field, which has estimated resources of 1.3 trillion cubic metres of gas.

"In the nearest future, we are able to create gas exporting capacity comparable to that of European gas exports," Mr. Miller said.

Gazprom's gas exports to Europe, where it covers a quarter of gas needs, are expected to fall this year from the 150 billion cubic metres it shipped in 2011.

Russia, the world's second-largest gas producer after the United States, has a sole LNG-producing plant, Gazprom-led Sakhalin-2 project, which produces 10 million tonnes of the frozen gas a year.

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Another LNG project, designed on the basis of Shtokman gas field in the Barents Sea, has been postponed due to costs overrun.

Gazprom will also develop other East Siberian fields, such as Kovykta, to feed the eastern route.

Russia has long eyed pipeline gas exports to China, the world's top energy user, but the two neighbours have been unable to agree on pricing, funding and routes.

There has also been delay in decision-making in China ahead of a once-in-a-decade change of political leadership.

Russia has planned to ship as much as 68 billion cubic metres of gas to China.

Mr. Miller told reporters that there is a "positive dynamic" in China talks.

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