Gazprom may delay Vladivostok LNG to focus on gas line to China

(Bloomberg; June 19) -Gazprom could delay some investments next year to focus its resources on building natural gas pipelines to China and paying dividends, a person with knowledge of the matter said. Investments in the planned Vladivostok liquefied natural gas project in Russia’s Far East and possibly other projects may be postponed, the person said, asking not to be identified as the information isn’t public.

U.S. and European sanctions on technology exports to Russia could hold up Vladivostok construction in any case, he said. Gazprom had planned to start the LNG project, a day’s voyage from the world’s biggest LNG importer, Japan, by 2019. Seeking to increase its presence in Asia, the Russian gas giant agreed in 2011 with a group of Japanese companies led by trader Itochu Corp. to study the feasibility of the project.

Last year, Gazprom said pipeline gas supplies to China could be more competitive than Vladivostok LNG, a project that may cost about $15 billion, according to estimates of VTB Capital analysts in Moscow. A gas pipeline into China would cost much more than that, but would deliver more gas than an LNG plant.