Yakutia – Khabarovsk – Vladivostok gas pipeline to be constructed by end of 2017

Alexey Miller, Chairman of the Gazprom Management Committee informed today Vladimir Putin, President of the Russian Federation that after having started pre-development operations on the Sakhalin Island and the Kamchatka Peninsula, Gazprom set itself a task to start the second stage of the Eastern Gas Program and establish new gas production centers. First of all, these are the Yakutia gas production center and the Irkutsk gas production center.

“Having started operations at the Chayandinskoye field, we are planning to construct a gas pipeline from Yakutia to Vladivostok via Khabarovsk (the gas pipeline length will be 3,200 kilometers). After that, along with the Kovyktinskoye field pre-development, we are planning to start construction of a gas pipeline that will serve as the second part of a 800 kilometer gas pipeline from Yakutia,” said Alexey Miller.

He stressed that the Investment Rationale for the Yakutia – Khabarovsk – Vladivostok gas pipeline construction had already been adopted. The gas pipeline will be constructed by the end of 2017.

A provision is also made for gas supply from the Irkutsk gas production center to the west. Thus, Eastern Russia will be connected to Western Siberia, the main gas-consuming center, so that the unified gas supply system will cover the whole country.

“We could also mention the LNG plant construction near Vladivostok, because even though we give priority to the domestic market, we are seriously <...> considering creation of a new center for Russian gas export to Asia-Pacific. You know this market is the world's most receptive and it is developing at a rapid pace. <...> It offers hopeful prospects, and in the nearest future we might create gas export capacities that will be comparable to gas supplies to Europe, or will even overpower them,” noted Alexey Miller.

Gazprom is planning to supply pipeline gas to Asia-Pacific on a second-priority basis after finishing the LNG plant construction and signing long-term contracts for LNG export from Russia.

Gazprom Website Editorial Board

 

Meeting beginning transcript

Vladimir Putin: Dear Mr. Miller! Quite recently we have inaugurated a very large and rich field – Bovanenkovo. Once again, I'd like to congratulate you and those who brought this program to such a high level.

Today I'd like to discuss an issue that's every bit as important, I mean the Eastern Gas Program development. We prepared and adopted it in 2007. Since then, Gazprom has done much work, I mean establishment of two gas production centers: in Kamchatka and Sakhalin. Gas has arrived in Petropavlovsk-Kamchatsky as well as in Khabarovsk and Vladivostok. We are implementing pipeline gas supply projects.

Now we have reached the next stage of the Eastern Gas Program – beginning of operations for fields pre-development in Yakutia and in the Irkutsk Region – Chayanda and Kovykta. These are major fields with globally significant reserves. I'd like to remind you we have agreed that after the start of operations there we will execute plans on creating new transmission opportunities, on constructing at least two new pipeline systems.

I would also like to remind you that we had it settled that gas from these fields would primarily be used for domestic needs, for domestic consumption. But considering immense reserves we have there, that is 3 to 3.5 trillion cubic meters of gas, one more gas export center could be established with the main focus on Asia-Pacific. I mean in this direction we should primarily develop everything connected to liquefied natural gas. I'll remind you that we have developed shipbuilding facilities in the Far East with a view to book orders for LNG carriers at Russian shipyards.

Now I would like you to tell me at what stage the preparation for the second stage is, what and when Gazprom is planning to execute. Please.

Alexey Miller: Esteemed Mr. Putin. Gazprom is executing the Eastern Gas Program in a sustained way. Two gas production centers have been created: in Kamchatka and Sakhalin; two gas trunklines have been built: Sobolevo – Petropavlovsk-Kamchatsky and Sakhalin – Khabarovsk – Vladivostok.

Today Gazprom continues operations on Sakhalin to bring onstream in 2013 a new field – the Kirinskoye field. Its uniqueness lies in that gas will be produced there from seabed reservoirs for the first time in Russia. Of course, Mr. Putin, having started fields pre-development on Sakhalin and Kamchatka, now we set a task of starting the second stage of the Eastern Gas Program and establishing new gas production centers. These are, first of all, the Yakutia and Irkutsk gas production centers.

Vladimir Putin: Kovykta is in Irkutsk and what is there [Yakutia gas production center], Chayanda?

Alexey Miller: Yes, Chayanda is the basic field of the Yakutia gas production center. The aggregate resources of Eastern Siberia and the Far East make up 53 trillion cubic meters onshore and 15 trillion cubic meters offshore.

Vladimir Putin: And how much is there in Irkutsk?

Alexey Miller: As for the Irkutsk and Yakutia gas production centers, their reserves amount to 3.7 trillion cubic meters today.

Vladimir Putin: How much is here?

Alexey Miller: There are two and a half here, and the Chayandinskoye field contains 1.2 trillion cubic meters of gas. In general, the level of geological exploration in the region is still very low, it is only 8 per cent onshore and 6 per cent on the continental shelf.

Vladimir Putin: Are you going to lay the pipe to the East from Yakutia first?

Alexey Miller: Our top priority is to start pre-development of the Chayandinskoye field, at the second stage we will tap into the Kovyktinskoye field and develop the Irkutsk gas production center and the third stage is connected with the Krasnoyarsk center.

Having started with the Chayandinskoye field, we are planning to build a gas pipeline from Yakutia to Vladivostok via Khabarovsk (this gas pipeline will stretch 3,200 kilometers) and after that, in parallel with the Kovyktinskoye field pre-development, we will begin constructing a gas pipeline that will be the second part of a 800 kilometer gas pipeline from Yakutia.

Vladimir Putin: You do it to connect these two fields.

Are you moving to the West from here?

Alexey Miller: We are planning to subsequently supply gas from the Irkutsk gas production center to the west towards Krasnoyarsk, Novosibirsk and Omsk (the distance is above 2,000 kilometers). Thereby, we are going to connect the eastern part of our country, Eastern Siberia, to Western Siberia, the main consumption center.

Vladimir Putin: Thus, a unified gas supply system will emerge in our country.

Alexey Miller: The Unified Gas Supply System of entire Russia.

By now, investment rationales are ready for the Chayandinskoye field and for the gas pipeline from Yakutia to Vladivostok via Khabarovsk.

As for the priority status of the Eastern Gas Program and the gas supplies to domestic consumers (this is how Gazprom ranges its priorities), we have elaborated general gas supply and gasification schemes for 11 Russian constituents in this region and signed the relevant agreements with local administrations. We are pretty much aware this is a two-way street, and in addition to the lion's share of work that we do, local authorities, heads of the Russian constituents should also take measures on preparation of consumers for gas supplies and creation of the relevant gas distribution capacities. Of course, it should be remembered that Eastern Siberian gas is, as you know, rich and multi-component. Ethane, propane and helium are contained in it in commercial volumes.

Vladimir Putin: The gas chemical sector should be developed.

Alexey Miller: ... the gas chemical sector should be developed simultaneously.

Considering that Gazprom doesn't view gas chemistry as a top-priority objective at the moment, adequate investments should be made by the companies for which it is the main line of business. Of course, they should create capacities in a synchronized manner, simultaneously with the Chayanda field pre-development and the gas transmission system construction.

Vladimir Putin: Mr. Miller, what about the timeline?

Alexey Miller: About the timeline. The investment rationale has been adopted. As for the gas trunkline, we think it could be ready by the end of 2017. Thus, we can talk about the LNG plant construction near Vladivostok with full awareness that, even though we give priority to the domestic market, great attention, as you have said today, is being given to creation of a new center for Russian gas export to Asia-Pacific.

You know this market is the world's most receptive and it is developing at a rapid pace. The burgeoning markets are China, India, Japan, Korea, Taiwan, Thailand, Bangladesh, Singapore and Vietnam. They offer great prospects, and in the nearest future we may create gas export capacities that will be comparable to gas supplies to Europe, or will even overpower them.

Vladimir Putin: Mr. Miller, will you build a branch pipeline from the Chayandinskoye field or will there be a separate pipeline to Vladivostok?

Alexey Miller: There will be a separate gas pipeline to Vladivostok.

Vladimir Putin: How many kilometers?

Alexey Miller: 3,200.

Vladimir Putin: Will it be ready for startup in the end of 2017?

Alexey Miller: Yes, of course. It will take five years considering that the investment rationale is already prepared.

Vladimir Putin: From here to Irkutsk?

Alexey Miller: 800.

Vladimir Putin: Well, there is not much work to do.

Alexey Miller: The gas pipeline is designed within the corridor of the Eastern Siberia – Pacific Ocean oil pipeline. This will allow optimizing costs on infrastructure and energy supply. Speaking of the gas trunkline system from Irkutsk to Yakutia and from Yakutia to Vladivostok via Khabarovsk, the issue of choosing a name for this gas trunkline system is gaining relevance.

Vladimir Putin: Think about it or announce a contest on the Internet. People who take interest in the Eastern Russia development will offer you their ideas.

Alexey Miller: All right, Mr. Putin.

<...>

As for pipeline gas export, we are planning to do it at the second stage after having built the plant and having concluded long-term contracts for liquefied natural gas supply from Russia.

Vladimir Putin: How much will be invested in the Irkutsk project and how much in your opinion will be invested in fields pre-development in the Irkutsk Region? How much will the gas pipeline system cost?

Alexey Miller: Now we may cite the figures from the investment rationale elaborated for Chayanda and for the gas trunkline system to Vladivostok. RUB 430 billion is slated for the field pre-development and around RUB 770 billion – for the gas trunkline construction.