THE WALL STREET JOURNAL: ExxonMobil: To Focus On Exporting Sakhalin-1 Gas Via Pipe: “However, the consortium is yet to conclude any gas sales agreements to export its gas via pipeline and is lagging behind the Sakhalin Energy Investment Co. Ltd. project, led by Shell which is well on its way to selling out all of its gas as LNG.”: “ The Shell-led Sakhalin-2 project, which is valued around $10-$12 billion, has focused on selling its gas in the form of LNG to customers in Japan and is in discussions with Korean and Chinese companies.” (ShellNews.net) 17 Nov 04
DOW JONES NEWSWIRES
LONDON -- U.S. oil giant ExxonMobil Corp. (XOM) said Tuesday that it will focus on exporting gas from its Sakhalin project in Russia's far east via pipeline and not as liquefied natural gas - as competitors have done.
"For the markets we're targeting, pipelines are more economical," Jack King, vice president of Exxon Neftegas Project Services Inc. told reporters at a conference here.
However, the consortium is yet to conclude any gas sales agreements to export its gas via pipeline and is lagging behind the Sakhalin Energy Investment Co. Ltd. project, led by Shell (RD, SC), which is well on its way to selling out all of its gas as LNG.
ExxonMobil owns 30% of the Sakhalin-1 project and a Japanese consortium including Itochu Corp. (8001.TO), Marubeni Corp. (8002.TO), and Japan Petroleum Exploration Co.(1662.TO) owns 30%, with the remainder owned by Indian and Russian companies.
The Sakhalin-1 consortium recently completed a feasibility study to build a natural gas pipeline to Japan. According to King, the study confirmed the pipeline is economically and technically viable.
The Shell-led Sakhalin-2 project, which is valued around $10-$12 billion, has focused on selling its gas in the form of LNG to customers in Japan and is in discussions with Korean and Chinese companies.
The ExxonMobil project is expected to start shipping natural gas in 2008. Rival Sakhalin Energy Investment expects to deliver its first shipment of LNG in late 2007.
"We're seeing the benefits and the flexibility of LNG in the progress we've made versus their (ExxonMobil's Sakhalin-1) progress," Ian Craig, CEO of Sakhalin Energy, told Dow Jones Newswires.
LNG is much more flexible with a number of delivery options, unlike pipelines, which require a major financial commitment from customers and are therefore a more complex undertaking.
-By Selina Williams, Dow Jones Newswires; 44-0207-842-9262; selina.williams@dowjones.com