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. Last Updated: 07/27/2016

Gazprom Opens Its First Field in 5 Years

Gazprom opened its first major natural gas development in more than five years Thursday as the company seeks to compensate for declining output at its biggest fields.

Gazprom and its partner NGK Itera started commercial production at the Beregovoye field on the Arctic Circle in western Siberia, tapping a deposit that holds more than 300 billion cubic meters of gas, equal to two years of Russian gas exports to Europe. Officials, including Itera chairman Igor Makarov, flew to the site by helicopter from Novy Urengoi in the Yamal-Nenets autonomous district.

State-run Gazprom's three biggest fields are all in decline, forcing the world's biggest producer of the fuel to rely on acquisitions to bridge the gap until it can start developments in even harsher, more remote locations.

"Gazprom's strategy is to consolidate as many valuable gas assets in Russia as possible," said Caius Roa Rapanu, an energy analyst at UralSib. "Once they do that, various production strategies can be implemented."

Gazprombank, Gazprom's banking unit, took control of the Beregovoye field from Itera last year. Itera's original plan to start extraction in 2003 was thwarted by Gazprom, which denied access to its pipeline network, citing capacity constraints.

The Federal Anti-Monopoly Service is suing Gazprombank for buying the stake in Sibneftegaz before requesting permission from regulators, Interfax reported last month.

Also Thursday, a Gazprom executive said the company has shortlisted four firms for a project to build a liquefied natural gas plant on the Baltic Sea and will pick one or two equity partners in July.

Project head Alexander Krasnenkov said the shortlist included one Canadian, one Japanese and one European company. He did not name the firms, but said Gazprom would keep 51 percent of the project, while foreign partners would share 49 percent.

"Gazprom's management will review our LNG strategy in July, and by that time we will take a final decision on partners," he told reporters.

Gazprom has said it might build the plant near St. Petersburg by 2011 to 2012 together with Petro-Canada.

Japan's Mitsui and Mitsubishi, Britain's BG and Russian-British TNK-BP have also shown interest in the project.

The shortlist announcement has been repeatedly delayed and was last planned for September. On Thursday, Krasnenkov said the names from the shortlist might be unveiled at an LNG conference in Barcelona next week.

Bloomberg, Reuters