Russian government passes law to open up LNG exports

Reuters

* Russia aims to double LNG market share to 10 pct by 2020

* Wants to produce 35-40 mln T of LNG by 2020 from 10 mlnnow

* Russia big in conventional gas, has been slow to developLNG

By Vladimir Soldatkin and Katya Golubkova

MOSCOW, Oct 30 (Reuters) - Russia will open up liquefiednatural gas (LNG) exports for companies other than Gazprom under a law passed by the government on Wednesday aspart of plans to more than double its global market share by2020.

Gazprom is the world's largest gas producer but has only oneLNG plant with an annual capacity of 10 million tonnes and justa 4.5 percent global market share.

It plans to build new facilities, as do rivals Rosneft and Novatek, which aims to launch the firstby 2017.

"Let's hope that this (new law) will create additional scopefor the whole energy industry and allow us to secure a footingin fast-growing economies," Prime Minister Dmitry Medvedev tolda government meeting, referring to Asian markets including topLNG importer Japan.

SURGING U.S. OUTPUT

Unconventional shale gas has allowed the United States tosurpass Russia in overall gas output, and it is set to cedesupremacy in oil production to Washington, as well.

President Vladimir Putin has called on industry to spur LNGoutput, and Novatek, Russia's second-largest gas producer,working with France's Total and China's CNPC aims toproduce 16.5 million tonnes of the fuel by 2018 in Russia'sArctic Yamal Peninsula.

Rosneft aims to produce LNG jointly with U.S. companyExxonMobil in Russia's Far East.

Analysts said it was time to break Gazprom's monopoly on gasexports, which it has held since 2006. There are signs itscontrol of pipeline gas exports might be also curbed.

"Russia will be in a role of needing to catch up but itcould be quick. If Gazprom cannot take a decision on theSakhalin plant's expansion, we have Novatek and Rosneft's newplants," said Andrey Polischuk, an analyst with Raiffeisenbank.

Some of Russia's conventional energy projects - includingthe Gazprom-led Shtokman gas field - have been shelved orcancelled since the shale oil and gas revolution in the UnitedStates.

Energy Minister Alexander Novak said he expected Russia toincrease its global market share in LNG to 10 percent by 2020 byproducing 35-40 million tonnes, with output rising to 70-80million tonnes by 2030. Qatar is the largest producer currently.

"U.S. (LNG) exports are supposed to come on line starting inthe 2015-2018 period at the earliest," said Kyle Davis, apartner at law firm Goltsblat BLP.

"If Russia moves faster than its competitors to get LNGexports on line, it will have been able to secure financing andlong-term export contracts under less dynamic LNG pricingconditions than many expect in the future."

The LNG law, first raised last year, is expected to be sentto the lower and upper chambers of parliament by the end of theyear. Both are dominated by allies of President Putin and itshould pass easily. Putin will then have to sign it into law.

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