Yuzhno-Sakhalinsk today hosted the opening of the 13th Sakhalin Oil and Gas 2009 International Conference.

Led by Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee, the Company’s delegation is taking part in the Conference. At the plenary meeting Alexander Medvedev delivered a speech dedicated to Gazprom Group’s strategy on the liquefied natural gas (LNG) market.

In his speech Alexander Medvedev emphasized the rapid pace of the global LNG market development. Since 2005 the market volume has grown by more than 20 per cent and averaged 240 billion cubic meters last year. Nowadays, the LNG share reached 29 per cent in the global gas trade. According to experts’ estimates, by 2020 the annual volume of LNG production will exceed 500 million tons, which is equal to some 700 billion cubic meters of gas.

The speaker underlined that in the coming years Russia would become one of the leading LNG producers accounting for up to 10 per cent of the global LNG supplies. Out of this amount 17 million tons will be produced by the current projects of Gazprom – Sakhalin II and the first phase of the Shtokman field development. Subsequently, this amount will be replenished through putting onstream the second and the third development phases of the Shtokman field, as well as other LNG projects.

Alexander Medvedev also stated that Gazprom was going to actively develop key segments of the LNG business across the entire value chain: production, sea-borne transportation, marketing and the access to the ultimate consumer.

Summing up his speech, Alexander Medvedev noted that Gazprom’s Strategy for Liquefied Natural Gas Production and Supply would enable the Company to transform itself from a regional player of LNG spot markets into a global player on the world LNG market.

Background:

In order to retain the leading position on the global gas market, Gazprom is implementing the Strategy for Liquefied Natural Gas Production and Supply. In line with the Strategy, the Sakhalin II project, with Gazprom as the majority shareholder, plays a key role in developing the LNG business.

In February 2009 the first Russian LNG plant was inaugurated on the Sakhalin Island as part of the Sakhalin II project. In the short term the project will enable to substantially expand Gazprom’s presence on the LNG market.

Gazprom is currently active in implementing the Shtokman field development project aimed at ensuring uninterrupted LNG supplies to the target markets (North America and Asia-Pacific region) in the long term and fortifying the Company’s positions in the LNG trade segment. Within the first phase of the project it is scheduled to annually supply 7.5 million tons of LNG. At present, the efforts are being taken to provide the project with the required infrastructure.

Among the long-term objectives of Gazprom are entry into international projects for gas production, which subsequently may be used for LNG production and exports. This work is important for enhancing the scope of LNG trading operations and compiling a diversified contract portfolio.

By now, Gazprom has entered into 35 framework agreements with the leading LNG market players. Starting from September 2005, the total amount of LNG sales by Gazprom Group is approaching 3 billion cubic meters. The Group has effectuated 33 LNG deliveries.

The 13th Sakhalin Oil and Gas 2009 International Conference lasts from October 1 to October 2. The Conference has brought together around 300 heads and experts from the world’s leading oil and gas companies, representatives of executive and legislative authorities, scientists from Russia, China, the Netherlands, the USA, South Korea and Japan.