Exxon Balks at Sakhalin-1 Gas Offer

ExxonMobil is dissatisfied with an offer from Gazprom to sell gas from its Sakhalin-1 project for half the domestic market price, a source close to the discussions said Wednesday.

The U.S. oil major is still in talks with Gazprom and China over gas from the offshore Sakhalin project after rebuffing the offer.

"The price [Gazprom] gave for Sakhalin was half the domestic market price, which is extremely low," the source said.

Russian domestic prices stand at slightly more than $50 per thousand cubic meters but are set to be liberalized by 2011.

Gazprom's prices for Europe are pegged to international refined products prices and have doubled to $400 per thousand cubic meters over the past year. But in Russia, Gazprom buys gas from oil firms at knock-down prices of less than $40 for the volume, as they are banned from selling abroad.