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UPDATE 2-Russian government passes law to open up LNG exports

Vladimir Soldatkin and Katya Golubkova
Wednesday, 30 Oct 2013 | 9:20 AM ET

* 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 mln now

* Russia big in conventional gas, has been slow to develop LNG

MOSCOW, Oct 30 (Reuters) - Russia will open up liquefied natural gas (LNG) exports for companies other than Gazprom under a law passed by the government on Wednesday as part of plans to more than double its global market share by 2020.

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

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

"Let's hope that this (new law) will create additional scope for the whole energy industry and allow us to secure a footing in fast-growing economies," Prime Minister Dmitry Medvedev told a government meeting, referring to Asian markets including top LNG importer Japan.

SURGING U.S. OUTPUT

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

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

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

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

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

Some of Russia's conventional energy projects - including the Gazprom-led Shtokman gas field - have been shelved or cancelled since the shale oil and gas revolution in the United States.

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

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

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

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

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