Gazprom, Novatek Discuss Yamal LNG Project

Russia's two biggest natural gas producers, OAO Gazprom (GAZP.RS) and OAO Novatek (NVTK.RS), have held a working meeting to discuss production of liquified natural gas, or LNG, on the Yamal peninsula, and will start talks with potential partners, Novatek said Thursday.

Gazprom Chief Executive Alexei Miller and his Novatek counterpart Leonid Mikhelson "discussed the development plan for Novatek's subsidiary, Yamal LNG, as part of the general plan to create LNG production capacity at the Yamal peninsula," Novatek said in a statement.

Novatek's board last month approved the $650 million acquisition of a 51% equity stake in OAO Yamal LNG, which operates the big South-Tambeyskoye gas condensate field on the Yamal peninsula.

The peninsula in northern Russia is estimated to hold 5.9 trillion cubic meters of gas reserves, and state-controlled Gazprom has set development of the region as a top priority as production at its current Soviet-era fields begins to decline.

The Tambeyskoye group of fields, of which Gazprom also holds licenses, will provide the basis for the development of LNG facilities, Novatek said.

Gazprom plans to start a feasibility study for an LNG plant on the peninsula early next year. The company has said it may invite international energy majors such as Royal Dutch Shell PLC (RDSA), ConocoPhillips (COP) and Exxon Mobil Corp. (XOM) to jointly develop gas projects in the country's Arctic region.

"To effectively develop Yamal LNG it would be prudent to begin discussions with potential partners in the project," the statement said summing up the results of the meeting.

Company Web site: www.novatek.ru

-By Jacob Gronholt-Pedersen, Dow Jones Newswires; [phone]; [e-mail]