Exxon, Rosneft to build LNG plant with ONGC and SODECO
29 October 2018
Russia's Rosneft and U.S. ExxonMobil plan to build a liquefied natural gas (LNG) plant in a consortium with Indian and Japanese partners, spreading the estimated USD 15bn cost. The four companies, Rosneft, Exxon, Japan's SODECO and India's ONGC Videsh, are partners in the Sakhalin-1 group of fields that will supply the gas, but Exxon and Rosneft had initially planned to build the LNG plant without the other consortium members.
As well as spreading the costs among more stakeholders, the broader involvement of the participants may mitigate sanctions risk. Initially, Rosneft and Exxon unveiled their joint plans to build an LNG production site in Russia's Far East to President Vladimir Putin in 2013. But production of the super-cooled, seaborne gas has so far failed to materialise for many reasons, including international sanctions against Moscow for its role in the Ukraine conflict.
Sakhalin-1, a hydrocarbon project, is led by Exxon with a 30% stake. 20% belongs to Rosneft, with the rest split between SODECO (30%) and ONGC Videsh (20%). "No one is interested in financing such a project alone," the source close to Exxon said. Asked how the LNG plant deal would be structured, the senior Rosneft executive said: "It will be Sakhalin-1." The sources did not say how the financing of the LNG plant would be shared between the participants.
The source close to Exxon said a decision whether to go ahead with the LNG project was expected in 2019.