Gazprom considers shelving Vladivostok LNG project

Gazprom says it could shelve its Vladivostok liquefied natural gas project as the Russian state-controlled energy giant focuses on supplying more gas to China by pipeline.

The project, which had been scheduled to start production in 2018 with capacity of 10m tonnes a year of LNG, would be the first major Russian energy project to be publicly scrapped since the US and Europe targeted the country’s energy industry with sanctions.

Bloomberg reports that analysts predict the plant may appear less attractive given expectations of a glut of LNG as projects in Australia and Indonesia start production and US exports of shale gas ramp up.

Western sanctions have so far not touched the Russian gas industry, with politicians fearing that Moscow could retaliate by cutting off European countries’ gas supplies.

However, Gazprom’s oil subsidiary, Gazprom Neft, is subject to US sanctions on the supply of equipment and technology for certain types of oil production as well as European financial sanctions. Like other Russian companies, Gazprom has been affected by the reluctance of western investors and banks to lend them money.

The Vladivostok LNG project is one of several LNG plants planned over the next five to 10 years that had been intended to make Russia a major player in the global LNG markets.