Rosneft puts up a fight with Gazprom over Arctic LNG

Rosneft President Igor Sechin seeks President Putin's blessing for a liberalization of the Russian gas export regime. Photo:

We control offshore Arctic gas reserves of 21 trillion cubic meters and would like to engage in production and exports of LNG, Rosneft leader Igor Sechin told President Vladimir Putin.


Our main concern today is how to use the major gas resources, which are found in our oil fields, Sechin said in last Friday’s meeting in a Government Commission on Energy Strategy and Environmental Protection.

According to the powerful oil company leader, the Russian Arctic shelf holds up to 80 trillion cubic meters of natural gas, of which 21 trillion is currently on the hands of Rosneft. Only in the Kara Sea, Rosneft has gas reserves exceeding 11 trillion cubic meters, Sechin said, a transcript from the meeting reads.

“We are therefore requesting the government to look at the question of liberalizing the gas export regime”, Sechin said, adding that he has in mind only exports of LNG.

According to Sechin, the proposed liberalization of the Russian gas export regime will not inflict any damage on Gazprom, the country’s current gas export monopolist. The LNG from Rosneft will be sold in markets where Gazprom is not present, he argued.

From its side, however, Gazprom is increasibly uncomfortable with the growing competition from other Russian companies. In addition to Rosneft, the company is challenged also by Novatek, which is developing a major LNG plant in Yamal. As previously reported, also Novatek has requested the government for permission to export LNG.

While both Rosneft and Gazprom look at LNG production, Gazprom has proved reluctant to take on the new production technology and instead invests in pipeline projects. Despite several years of preparations, the company has so far failed to develop its main LNG project, the Shtokman field in the Barents Sea.

While Gazprom appears deadlocked in its Arctic projects, Rosneft goes ahead with full steam. According to Igor Sechin, his company intends to order as many as 27 platforms and 50 ice-protected vessels of various classes only for the first phase of the Kara Sea projects.