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Last Updated: Tuesday, 19 June 2007, 21:49 GMT 22:49 UK
Gazprom bid to cut off China gas
Gazprom gas pipeline
Gazprom is Russia's most important company
Russian energy giant Gazprom has asked the government to cancel an agreement to pipe large quantities of gas to China from fields in Siberia.

Alexander Ananenkov, the group's deputy chief executive, said plans to deliver 80bn cubic metres of gas a year to China would leave Russia short.

The gas was due to be exported from Exxon Mobil's Sakhalin-1 project on Russia's Pacific coast.

The move could fan fears over Moscow's hold on key gas and oil projects.

"We consider it necessary for a directive to be issued and Sakhalin-1 gas to be sold to Gazprom so we could supply gas to Russia's regions, and for the gas not to be exported as proposed by Exxon Mobile," said Mr Ananenkov, speaking at a meeting of a regional social and economic development council.

He claimed that Russia's four far eastern regions alone need more than 15bn cubic metres of gas a year.

Gas shortages

If the Russian government responds to Gazprom's proposal and intervenes in the export agreements on Sakhalin-1, China will not have any access to Russian gas, despite a growing need for energy supplies to power its booming economy.

Such an action will also heighten concerns over the growing influence of state-run Gazprom and the Kremlin's grip on its domestic gas industry.

Russian gas accounts for 25% of supplies to the European Union (EU).

But critically, it means that gas shortages in Russia must be more serious than what is being said, analysts believe.

Shell was forced to sell its stake in the Sakhalin-2 project to Gazprom after pressure from Russian regulators.

And BP is currently waiting to hear if its licence for the Kovytka gas field in East Siberia - operated under a joint venture - will be withdrawn.

Analysts say Gazprom could face a fight in wresting control of Sakhalin-1 from rival Rosneft - the state-controlled oil firm - which is a shareholder in the project, together with Japan's Sadeco and India's Videsh.

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