Gazprom Shortlists 4 Firms for $3.7 Billion Baltic LNG

Russia's Gazprom has shortlisted four firms for a project to build a liquefied natural gas plant on the Baltic Sea and will pick one or two equity partners in July, an executive said on Thursday.

Project head Alexander Krasnenkov said the shortlist included one Canadian, one Japanese and one European company. He did not name the firms, but said Gazprom would keep 51% of the project, while foreign partners would share 49%.

"Gazprom's management will review our LNG strategy in July and by that time we will take a final decision on partners," he told reporters.

Gazprom has said it may build the plant near St Petersburg by 2011-2012 together with PetroCanada.

Japan's Mitsui and Mitsubishi, Britain's BG and Russian-British TNK-BP have also shown interest in the project.

The shortlist announcement has been repeatedly delayed and was last planned for September 2006. On Thursday, Krasnenkov said the names from the shortlist might be unveiled at an LNG conference in Barcelona next week.

Last year, Krasnenkov said Gazprom had invited 17 firms to participate in the project and 15 had shown interest.

Liquified Natural Gas Production

On Thursday, he said Gazprom had completed an investment study, which showed that some $3.7 billion will be needed to build the plant with capacity of up to 5 million tonnes of LNG per year.

Gazprom, the world's largest gas producer and supplier of a quarter of Europe's gas needs via pipelines, has yet to produce its own LNG, which allows super-cooled gas to travel much longer distances in tankers.

On Wednesday, Gazprom agreed to buy half of the Sakhalin-2 LNG project, previously led by Royal Dutch Shell, securing access to half of the project's output of 9.6 million tonnes of LNG per year - one of the world's biggest.

Sakhalin-2 will start producing gas next year.

In the European part of Russia, Gazprom's hopes rely on its huge Barents Sea Shtokman field, but its development has been repeatedly delayed and is now not expected before 2015.

Baltic LNG will mainly liquefy gas that will come by pipelines from Gazprom's Siberian fields.

Krasnenkov said Baltic LNG has held talks with the owners of LNG re-gasification terminals in Canada and the United States and also considered France, Britain and Spain as target markets.