Russia's Gazprom asked the government last night to block an Exxon-led project from selling gas to China, which would remove a challenge to its Asia strategy and seal its absolute control of gas exports.
Gazprom deputy chief executive Alexander Ananenkov said the gas from Sakhalin-1 on the Pacific coast was needed to supply Russia's Far East and plan to export 8 billion cubic metres (bcm) a year to China would leave the domestic market short.
"We consider it necessary for a directive to be issued and Sakhalin-1 gas to be sold to Gazprom, so we could supply gas to Russia's regions, and for the gas not to be exported as proposed by Exxon Mobil," Russian news agencies quoted Ananenkov as saying.
"Demand in the four Far Eastern regions alone is more than 15 bcm," he told a meeting of Russia's Far East socioeconomic development council, chaired by Prime Minister Mikhail Fradkov.
Stopping Exxon's Chinese plan would keep all Russian gas out of China, despite its thirst for energy supplies. An agreement on Russian gas pipelines has stalled because China is unwilling to pay as much for its gas as Gazprom wants.
Gazprom is building an Asian export strategy on the basis of the huge Sakhalin-2 project, next to Sakhalin-1, and is trying to shore up domestic supplies to give it free rein in exports, a strategy it has already employed in Europe.
Gazprom bought control of Sakhalin-2 at a knock-down price from Royal Dutch Shell and its Japanese partners, who were obliged to sell up after a campaign of criticism from Russian officials and threats of crippling licence withdrawals.
The deal put Gazprom in charge of a huge liquefied natural gas (LNG) plant due to come on stream next year. It wants to expand the plant to supply Asia's emerging LNG market, but first it must guarantee the domestic market will be fully supplied.
Gazprom told Reuters earlier this month that it was in talks with Exxon about buying all the gas from Sakhalin-1, whose shareholders also include state-controlled Rosneft, ONGC and a Japanese consortium, Sodeco.
Exxon signed a preliminary agreement in 2004 to supply Sakhalin-1 gas to Chinese firm CNPC but it has also held talks with Japan and India, which want to import its gas as LNG.
Exxon spokeswoman Jeanne Miller told Reuters the firm was evaluating potential gas sales to China and was conducting preliminary studies into the feasibility of a pipeline to northeast China, the nearest part of China to Sakhalin.
"We've been in discussions with Gazprom about all potential options for delivering the pipeline gas there," she said.