Bloomberg News

Rosneft Challenges Gazprom at Home to Double Share in Gas Market

April 23, 2013

OAO Rosneft (ROSN), Russia’s state- controlled oil company, is challenging OAO Gazprom (GAZP), the world’s biggest natural-gas producer, with plans to double its share of the domestic gas market and export the fuel to Asia.

Rosneft plans to take 20 percent of the domestic gas market by 2020, producing as much as 100 billion cubic meters a year, Vlada Rusakova, vice president for the gas strategy, said today at investor meetings in London. That is about as much gas as the U.K. uses in 15 months, according to BP Plc (BP/) statistics.

Previously Gazprom’s head of strategy, Rusakova joined Rosneft Chief Executive Officer Igor Sechin in London to update investors about plans to boost gas sales, tap Arctic offshore fields and develop tight oil deposits after completing a $55 billion purchase of TNK-BP last month. Rosneft, the world’s largest publicly traded oil producer by output after the deal, is also seeking to break Gazprom’s gas-export monopoly as it plans a liquefied natural gas development.

“We like to work with gas very much,” Sechin said at the investor meetings. “The domestic market is also attractive, and it suits us well.”

Limited to domestic gas sales by Gazprom’s monopoly on shipments abroad, Rosneft has long-term contracts for 72 billion cubic meters of gas a year as of the start of 2013. The oil producer plans to increase gas output to 63 billion cubic meters a year by 2015 from 41 billion cubic meters this year, according to a presentation webcast from London.

LNG Export

Rosneft has gas reserves totaling 5.8 trillion cubic meters, including its own reserves as well as 2.45 trillion cubic meters held by TNK-BP and 344 billion cubic meters from the Itera unit it bought last year.

The company has “everything” from finances to understanding of the markets to monetize its gas reserves, Rusakova said. It may produce unconventional gas if the economics allow, she said.

With President Vladimir Putin weighing proposals to allow more producers to export LNG, Rosneft aims to start shipping the cooled gas to Asia from 2018, Rusakova said. That means more competition with Gazprom, which plans to start its Vladivostok LNG project in the same region at about the same time.

Sechin urged the government to raise taxes for the gas- export monopoly, which pays the state budget 1.5 trillion rubles ($47.2 billion) compared with Rosneft’s 3 trillion rubles, and he wished Gazprom “good luck” with its development plans.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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