Rosneft Seeks Absheron Gas Project Stake

Source: Reuters 7/25/2013, Location: Asia

Russian oil major Rosneft is seeking a stake in Azerbaijan's Absheron gas project, sources close to the talks said, in the latest move that may help it become a competitor of Russia's gas exporter Gazprom.

Rosneft CEO Igor Sechin discussed a possible role in Absheron with Azeri President Ilham Aliyev during a visit to Baku this month and has also been in discussions with the project's leader, France's Total, the sources said.

Azeri state oil company SOCAR and the French oil company each hold 40 percent of the project to develop Absheron, a shallow-water offshore field on the Caspian Sea, under production-sharing agreements. The remainder is held by GDF Suez.

Exploratory drilling by Total showed the field contained 150 billion to 300 billion cubic metres (bcm) of gas resources. The find was declared commercial in 2012.

Azeri officials have said Absheron and other new fields would significantly increase Azeri gas exports in coming years, beyond the 10 bcm it has already pledged to Europe and 6 bcm it has pledged to Turkey from the giant Shah Deniz field 25 km from Absheron.

These Azeri exports are set to compete with supplies from Gazprom, which holds a monopoly on exports of Russian gas and covers a quarter of Europe's gas needs through pipelines. For Rosneft, an Azeri deal would be its foreign foray that could put it into direct competition with Gazprom in sales to Europe.

Rival new pipeline projects are being planned to reflect the future competition between Azeri and Russian gas.

Aliyev and Sechin discussed cooperation in oil and gas during the meeting, Rosneft said in a news release.

In response to a request for comment on the Absheron talks, Rosneft said it was studying options in Azerbaijan but did not comment on potential participation in specific projects. Total declined to comment.

Rosneft has made its growing gas business a top priority. Sechin has stopped short of openly challenging Gazprom's monopoly on the exporting of Russian gas but has sought to sidestep it - initially by striking a deal with Exxon Mobil to build a plant to liquefy natural gas from their Sakhalin-1 project in the Pacific.

In a sign of frustration with Gazprom's gas export monopoly, the Kremlin has launched a debate on export rights for producers of LNG, though President Vladimir Putin has warned other Russian companies against competing with Gazprom in exports to Europe.

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