Streetwise Professor picks apart two dovetailing pieces of news – the first that Russia is making unprecedented pressures on ExxonMobil’s Sakhalin-1 project to export more of its production for domestic consumption inside Russia, followed by the announcement that Gazprom will ship gas from new fields in East Siberia to Southeast Asia, easing dependence on the European market.
Just note how it fits together. ExxonMobil, unique among foreign firms operating in Russia, has the right to export gas to Asia. Gazprom covets that market because it represents a major growth opportunity, and because it permits the company to lessen its dependence on European sales. But Gazprom is also short of gas and needs to serve domestic demand.
How to resolve that dilemma? Well, force ExxonMobil to sell the gas it had planned to sell to Asia inside Russia instead (at lower prices), and use its own gas to export to the more lucrative Chinese/Asian market.
I’d put heavy odds on it turning out that way. It makes strategic sense, in an opportunistic way, and hence fits in with the Russian/Gazprom MO.