By JAMES MARSON
MOSCOW -- A string of new Russian deals with Asian customers
marks the beginning of a major shift away from the country's
traditional markets in Europe, where it is facing competition
and regulatory pressure, said one of Russia's top energy
The world's largest energy
producer has for years threatened to switch its exports
eastward, but Deputy Prime Minister Arkady Dvorkovich said in
an interview with The Wall Street Journal that Russia
has finally made a breakthrough in its efforts to tap the
lucrative Asian market.
Russia has for decades been Europe's biggest energy
supplier, but has faced criticism for its hardball tactics,
including a European Union investigation launched last autumn
into whether its state gas firm abused its dominance in Central
and Eastern Europe.
Now, dwindling gas demand and regulatory pressure in Europe
have dictated a change in strategy, said Mr. Dvorkovich, who
oversees the government's energy policy.
Exports from Russian state gas giant OAO Gazprom's to the EU
slid last year as power producers favored cheap coal imports
from the US by booming gas
production. Lower gas sales are hurting Russia's economy as
they account for over 10% of export revenues.
"If Europe prefers energy sources that are not
environmentally clean, that's a decision for Europe," Mr.
Dvorkovich said. "It's okay. Demand exists in other regions of
Mr. Dvorkovich said Russia would continue to be "safe and
stable partners' to Europe and "deliver as much gas as it
needs," but saw greater prospects for boosting sales in
President Vladimir Putin said Friday that Russia would for
the first time allow companies other than Gazprom to export
gas, a form of the fuel that can be shipped to more distant
markets than pipeline gas.
Russia has been slow to develop LNG
capacity and strike a deal to sell gas via a pipeline to
hard-bargaining China. But now Gazprom and other Russian
companies have major new projects planned.
Shortly before Mr. Putin's announcement last week, Russian
energy firms signed a raft of gas-supply deals with Asian
OAO Novatek, Russia's No. 2 gas producer, signed an deal to
ship gas from its planned Arctic liquefaction plant to China
National Petroleum Corp., which acquired a 20% stake in the
State oil firm OAO Rosneft signed agreements to ship LNG to
Japan, as well as agreeing to supply China with 15 million
metric tons of crude oil annually for 25 years for just over
$10 billion per year.
Mr. Dvorkovich said liberalizing LNG
exports would speed up the three major projects planned by Gazprom, Novatek
and Rosneft by increasing competition. The decision to open up
exports "will put us into this market at the right time," he
"Russia has recognized, belatedly, that it could have missed
the boat," on LNG shipments to Asia, said Jonathan Stern, head
of natural-gas research at the Oxford Institute for Energy
If Russia is able to ship large volumes, it could have a
"huge impact" on the Asian market, said Thierry Bros, a gas
analyst at Societe Generale.
"Russia has a huge amount of gas that's cost competitive
against the rest of the world. It could put pressure on other
LNG projects, such as those in Australia, which are already
suffering cost overruns," he said.
Mr. Dvorkovich said companies would be given permission to
export LNG on a project-by-project basis. The government isn't
currently considering allowing LNG
shipments to Europe, he said, in order to prevent competition
with Gazprom's pipeline deliveries to its main market.
Gazprom says it hopes by the end of the year to conclude a
deal to sell pipeline gas to China. But the two sides are still
negotiating on price, a long-time sticking point in
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