Russ Oil-Gas

27 February 2007 - Upstream onLine - Russia's gas export monopoly Gazprom today ruled out a possible swap with state-controlled oil company Rosneft of upstream oil assets for Rosneft's gas pipelines in the Far East. "Gazprom's involvement in the Sakhalin-Khabarovsk gas pipeline does not foresee a swap of production assets," said Gazprom's spokesman Sergei Kupriyanov, Reuters reported. Interfax news agency earlier reporteded Rosneft chief executive Sergei Bogdanchikov as saying he would be prepared to cede the pipelines in return for a share in the West Siberian Priobskoye oilfield. But he said Rosneft had had no such offer from Gazprom. Gazprom has repeatedly said it wanted to buy the two gas pipelines running from Sakhalin Island to the Khabarovsk region on the mainland - part of a handful of domestic Russian gas pipelines that do not belong to Gazprom. The exchange of comments came as the two giant companies prepare for the last round in their protracted battle over the assets of the bankrupt oil company Yukos, whose assets will go under the hammer as early as next month. Gazprom's oil arm, Gazpromneft, owns a licence for the southern part of the giant Priobskoye field, while the northern part is being developed by Rosneft's unit Yuganskneftegas, a former top unit of Yukos. Rosneft also has wide involvement in energy projects on Russia's Sakhalin Island, including the Sakhalin-1 venture, which it co-owns with US supermajor ExxonMobil, India's ONGC and a Japanese consortium. Sakhalin-1 is already producing oil and is obliged by its licence terms to start exporting gas next year, but the partners have not yet agreed how they will organise gas exports. The project's leader, ExxonMobil, had said Sakhalin-1 could pipe gas to China but Rosneft and ONGC are both in favour of liquefying it instead. Sakhalin-1 does not have a plant to produce liquefied natural gas (LNG), but at the end of last year Gazprom agreed to buy control of the nearby Sakhalin-2 project, the world's biggest LNG project, and is looking for more gas to process. Rosneft and Gazprom signed a wide-ranging co-operation deal in November, which covered the energy giants' joint work in exploration, production, transportation and refining of hydrocarbons. Gazprom has a monopoly on gas exports, but Sakhalin-1 and Sakhalin-2 are production sharing agreements, making them exceptions to the rule. That means ExxonMobil's proposed export pipeline would be the only independent gas export pipeline in Russia if it went ahead.