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Gold/Mining/Energy : LNG -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (261)	10/12/2004 8:27:12 AM
From: Dennis Roth	Respond to of 919

Gazprom, Petro-Canada eye Russian LNG by 2009 Tue Oct 12, 2004 06:23 AM ET reuters.com By Richard Ayton MOSCOW, Oct 12 (Reuters) - Russian gas monopoly Gazprom (GAZPq.L: Quote, Profile, Research) and Petro-Canada (PCA.TO: Quote, Profile, Research) hope to start delivering Russian liquefied natural gas to the North American market by 2009 under a memorandum signed by the two firms on Tuesday. The two will consider building an LNG terminal in the Baltic port of Ust Luga near St. Petersburg, which would produce 500 million cubic feet per day or 3.5 million tonnes a year -- 2.5 percent of current global output -- and cost $1.2-$1.5 billion. "At the other end, in Canada, the re-gasification (terminal) would cost in the order of $500 million. In addition to that, there are obviously ships required to ship the gas," Petro-Canada Chief Executive Ron Brenneman told a briefing. Gazprom, the world's largest gas firm, is keen to supply U.S. markets, but as yet has no LNG facility of its own to supercool gas for onward shipment. Industry sources have told Reuters that Gazprom has also been in talks with British oil major BP Plc. (BP.L: Quote, Profile, Research) to swap its pipeline gas in Europe for BP-produced LNG and begin deliveries as early as next year. Gazprom has said the swap would allow it to learn more about the industry before it starts producing its own LNG from the giant arctic Shtokman field and clinches long-term supply deals with U.S. customers. Analysts welcomed Gazprom efforts to enter the LNG market, which is growing faster than the traditional gas business. "The global trade in LNG is accounting for an ever-growing chunk of the world's trade in gas - 27 percent in 2003 - due to the improved economics and flexibility of the LNG business and to higher prices for natural gas," Troika Dialog brokerage said in a research note. It added that the United States, the world's largest gas consumer, was experiencing a natural gas shortage that has sent gas prices rocketing. U.S. LNG imports could quadruple, making the market an attractive play for exporters, it said. The expected jump in U.S. LNG imports reflects the gap between domestic gas production and growing demand, especially from new power plants that are mostly fuelled by natural gas. POSSIBLE SHTOKMAN PARTNER Petro-Canada and Gazprom signed the agreement during a visit by Canadian Prime Minister Paul Martin to Moscow. Brenneman said a project feasibility study would take six months and help make his company a big player in the growing market for LNG, especially in North America, which faces declining conventional gas production. Adam Landes from Renaissance Capital said the two firms could focus on LNG supplies to central Canada and the U.S. Northeast and Midwest markets. He also noted that Petro-Canada owns a 17 percent stake in a BP-led LNG project in Trinidad & Tobago, which could potentially ease LNG-for-pipeline gas swap deals. Brenneman said his firm hoped to join Gazprom's multi-national consortium for the Arctic Barents Sea Shtokman gas field, one of the world's biggest deposits. Gazprom is also talking to U.S. ExxonMobil (XOM.N: Quote, Profile, Research) , ChevronTexaco (CVX.N: Quote, Profile, Research) , Norway's Statoil (STL.OL: Quote, Profile, Research) and other firms to develop an LNG project at the Shtokman field. "Ultimately, we hope that Petro-Canada will be part of the consortium to develop the Shtokman field. But the MOU contemplates an early delivery of gas from St Petersburg and that would come off the existing gas grid in Russia." "We have expressed an interest. We think... the experience we have in offshore development in harsh environments with the presence of ice would make us a logical partner for the Shtokman development," said Brenneman. LNG is gas, cooled to minus 259 degrees Fahrenheit (minus 162 Celsius) into a liquid, which shrinks to less than 1/600 of its original volume. Once it arrives at a re-gasification terminal in special tankers, it is returned to a gaseous state and fed into pipelines.