The Moscow Times reported that the government will push ExxonMobil hard to secure gas for a new pipeline in the Far East after Mr Vladimir Putin Prime Minister of Russia called on Friday for domestic energy needs to take priority over exports.

Gazprom began welding a major trunk pipeline to link offshore gas fields around the Pacific island of Sakhalin with the port of Vladivostok. Gazprom needs gas from the ExxonMobil-led Sakhalin-1 project to fill it.

Mr Putin said at a ceremony to mark the launch of construction “I would like to stress that the domestic market will be a priority for the gas from eastern Siberia and the Far East.”

According to the report, the 1,350 kilometers first phase of the Sakhalin-Khabarovsk-Vladivostok pipeline is due to come on stream in the third quarter of 2011, but Gazprom and ExxonMobil have yet to agree on gas supplies.

Mr Alexander Ananenkov deputy CEO of Gazprom told Mr Putin after the inauguration ceremony that “We will need to work intensively with Exxon to obtain these 8 billion to 10 billion cubic meters of gas from Sakhalin-1.”

Mr Sergei Shmatko Energy Minister estimated the cost of the entire far eastern pipeline project at USD 11 billion. He said Gazprom’s costs could be passed on to consumers by a nationwide increase in tariffs. The pipeline will initially have capacity for 6 billion cubic meters of gas per year rising to about 30 billion cubic meters after subsequent stages increase its length to 1,800 kilometers.

Mr Shmatko said any potential supply problems related to the project would be temporary. He said that “There is gas there. There is the possibility of agreeing with Exxon and receiving at least 8 billion cubic meters.”

(Sourced from The Moscow Times)