18-04-05 Russia, the world's largest natural gas producer, may need at least $ 31.6 bn through 2030 to explore east Siberia and Asian fields and supply gas to the US, China, Korea and Japan, according to a government report.
The energy ministry is drafting plans to tap eastern Siberian fields that may hold 11.3 tcm of gas, enough to supply Europe and Asia for more than 10 years, according to the report. The fields may produce 113.6 bn cmpy by 2030, equal to more than a fifth of Russia's current output.

The Asia and Pacific region may generate half of the demand growth for LNG in the next 15 years, ExxonMobil said. Russia, which has 27 % of the world's gas reserves, lacks pipelines and LNG ports to supply Asia. Exxon, Shell, BP and Russia's Gazprom lead ventures that plan to export gas from Siberia and Asian Russia.
"Export policy for gas supplies to the Asia-Pacific region and the US must be controlled by the government under law," the ministry said in the report, which was first presented in early April at a conference in St Petersburg, Russia. The legislation "should regulate the degree of freedom of entities' businesses and commercial activities," including foreign investors.

Russia's oil and gas pipeline networks, mostly built in the Soviet era, link the nation's European and western Siberian energy deposits to Europe. The ministry didn't give details on who would spend the money for the east Siberian and Asian projects or on financing.
State-controlled Gazprom, Russia's gas pipeline monopoly, plans to supervise the projects and maintain control over gas exports to avoid competition and prop up prices. The company is taking over state-owned Rosneft, giving President Vladimir Putin's government greater control over Russia's oil and gas industry.

Gazprom, which already supplies about 40 % of Europe's gas imports, may become the world's largest producer of oil and natural gas within five years, CEO Alexei Miller told on April 13. Gazprom, Rosneft and Surgutneftegaz, Russia's fourth- largest oil producer, in 2003 agreed to form a venture to exploit oil and gas fields in eastern Siberia.
Since then, Rosneft has taken over Yuganskneftegaz, formerly Yukos Oil's largest oil unit, which was confiscated by the Russian government and sold for $ 9.3 bn in December. Surgut agreed to buy Yukos's assets at the Talakan oil field, the largest oil deposit in the Yakutia region in east Siberia, after the government withdrew Yukos's exploration and development permits. Gazprom said that Yugansk would be split off from Rosneft before Gazprom takes over Rosneft.

Russia expects the bulk of east Siberian and Asian gas output to come from four regions: the Kovykta field, which is being developed by BP's Russian venture in the Irkutsk region; the Yakutia-based Chayandinskoye field; fields in the Krasnoyarsk region; and deposits around Sakhalin Island in the Sea of Okhotsk also will be crucial.
Exxon and Shell lead ventures planning to spend a combined $ 24 bn to develop two projects off Sakhalin andthe Russian government may soon sell licenses to exploit at least four other regions near Sakhalin. The four regions form production centres that Russia plans to link by building pipelines that also will connect up with Gazprom's existing gas network in west Russia.

The energy ministry supports the so-called "Vostok," or East, plan to link the Krasnoyarsk and Irkutsk regions with the domestic network in the West of Russia, according to the report. The East plan would cost $ 31.6 bn for gas exploration, extraction, processing and transport, the energy ministry said in its report.
The Yakutia production centre will work "autonomously to supply the internal demand of nearby territories," the ministry said. "Gas will be exported only from the Sakhalin centre." The ministry said rival plans would be less efficient. The Central program, which would cost $ 35.6 bn, would build pipelines to ship gas from Yakutia to China, and the West plan would cost $ 36.7 bn and ship gas to China from Krasnoyarsk, Irkutsk and Yakutia.

Gazprom expects the Exxon-led Sakhalin-1 project to have enough gas to meet Asian demand until 2015, delaying BP's Kovykta venture, which could produce 20 bn cmpy of gas starting in 2010, according to Alexander Medvedev, a deputy CEO at the Russian company.
"Volumes such as those from Kovykta aren't needed," he said April 12. "It's possible to meet demand by supplying gas from Sakhalin at lower costs than from Kovykta."

Gazprom will inherit a 20 % stake in Exxon's Sakhalin-1 project when it acquires Rosneft. Medvedev said Gazprom is "very close" to reaching an agreement with Shell to swap a 50 % stake in an Arctic European gas field in return for Shell giving Gazprom a 25 % stake in the Sakhalin-2 project.
Kovykta's operator, Rusia Petroleum, in which BP's Russian unit owns the controlling stake, agreed in 2003 to sell 900 bn cm of natural gas to China and South Korea over 30 years. Kovykta, which holds 2 tcm of gas reserves, will need $ 18 bn of investment.