By James Marson
MOSCOW--Russian state gas company OAO Gazprom (GAZP.RS) is
postponing construction of a liquefied natural gas plant on the
country's Pacific Coast, as it focuses on building pipelines for
gas delivery to China.
Vladivostok LNG was announced in 2013 in a bid to boost sales in
Asia as the company faces regulatory pressure and competition in
Europe. But Gazprom Chief Executive Alexei Miller said Friday that
it was no longer a priority.
"Vladivostok LNG isn't on the list of priority projects, and
isn't on the list of projects that will be carried out in the near
future," Mr. Miller told reporters.
By shelving the project, Gazprom is betting on the success of
delivering gas to China via pipelines. Last year the company signed
a contract to supply the country with hundreds of millions of
dollars of natural gas after more than a decade of talks.
That deal came as Moscow sought closer ties with Asia amid
increased tensions with the West over Russia's invasion of Ukraine.
Gazprom is also in talks with China on a second contract to deliver
gas via another route, although there are few signs of progress in
talks.
Gazprom has long sought to expand its sales in Asia. The
European Union in April announced antimonopoly charges against the
company for alleged abuse of its dominant position in some eastern
and southern European countries' markets. Gazprom denies any
wrongdoing.
Vladivostok LNG, which was planned to launch in 2018 with
capacity eventually reaching 15 million tons a year, is the second
LNG project to be postponed by Gazprom in recent years after it
shelved the giant Shtokman project in the Arctic in 2012 when cost
projections soared.
Russia is the world's second-largest natural gas producer but
lags competitors on the flexible and lucrative LNG market. Russia's
second largest gas company, OAO Novatek (NVTK.MZ), is building an
LNG plant in the Arctic with France's Total SA (FP.FR). But the
project has not secured all the financing it needs after the U.S.
imposed restrictions on Novatek, which is co-owned by a long-time
acquaintance of Russian President Vladimir Putin.
Andrey Ostroukh contributed to this article.
Write to James Marson at james.marson@wsj.com and Andrey
Ostroukh at andrey.ostroukh@wsj.com
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