Russian Energy Producer Rosneft LNG Plant Reported Delayed for Two to Five Years

MOSCOW (Reuters) – Russian energy producer Rosneft may have to delay development of its liquefied natural gas (LNG) plant on the Pacific island of Sakhalin for at least two years, sources said, after prices fell and financing all but dried up due to Western sanctions.

Source: www.reuters.com

>”[…] Rosneft, which has spearheaded President Vladimir Putin’s drive to increase oil and gas output and secure Russia’s energy dominance, signed an agreement with Exxon in 2013 that aimed at starting production of 5 million tonnes per year of LNG from 2018 at Sakhalin.

Russia is the world’s largest exporter of natural gas but mostly exports it by pipeline to customers in Europe. Once liquefied, natural gas can be transported by ship to customers in Asia, helping fulfill the Kremlin’s goal of finding new markets.

Two sources with direct knowledge of the project said the 2018 target was no longer realistic.

A source at Rosneft, who declined to be named because he was not authorized to speak to the media, said the plant would most probably “be postponed for three to five years because of lack of funds and low fuel prices”.

A second source said it could be delayed for two years.

“This is not a surprise,” the source said. “The year 2018 had never been seen as the final deadline. All the stuff that’s happening – a decline in LNG prices, a slump in demand, the economic crisis – only confirms that.”

A Rosneft company spokesman said there had been no change to the project’s timeline: “Rosneft has not revised the terms for the implementation of the far east LNG project.”

Exxon’s Moscow office declined to comment. A spokesman at Exxon’s headquarters in Texas also declined to comment.

In May 2014, Rosneft and Exxon signed a deal to continue work on the LNG plant, which will be partly fed from gas produced at Sakhalin-1, an oil and gas project in which Exxon is a major investor. […]”<

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