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Russian gas producer Gazprom has proposed expanding its rouble-for-gas scheme for pipeline gas to include liquefied natural gas (LNG), the Interfax news agency quoted a senior manager as saying on Monday.

The proposal from Kirill Polous, a deputy department head at Gazprom, comes after Russia moved to seize operations of the Sakhalin-2 LNG plant last week in retaliation for Western sanctions.

That order, signed by President Vladimir Putin, creates a new firm that will take over all rights and obligations of Sakhalin Energy Investment Company.

Energy firm Shell and Japanese trading companies Mitsui and Mitsubishi hold just under 50% of Sakhalin Energy.

Russia accounts for about 8% of global LNG supply with 40-billion cubic metres of supercooled gas a year coming mainly from Sakhalin-2 and Novatek’s Yamal LNG, Russia’s largest LNG plant.

In March, Putin said the world’s largest natural gas producer would require countries he termed unfriendly to pay for piped gas in roubles.

A number of Gazprom’s biggest clients in Europe were cut off after refusing to abide by the new rules.

“This is a question of co-ordinating pipeline gas exports and LNG,” Polous said, adding that there is foreign exchange competition between the pipeline gas, sold in roubles, and LNG, which is taxed in dollars.

Unlike its piped gas sales, the bulk of Russian LNG is consumed in Asia. In Europe, Spain is among the buyers of Russian LNG.

In 2021, Russia earned $7.3bn from LNG exports, according to the state tax service, compared to $55.5bn received from piped gas exports.

Neither Gazprom nor the energy ministry replied to Reuters requests for comment.

“Pipeline gas trade with European counterparts, unfriendly counterparts, is being conducted in roubles, but such measures do not cover LNG,” Polous was quoted as saying by Russia’s TASS news agency.

Before the recent conflict in Ukraine, which Moscow calls a “special military operation”, Russia had planned to produce as much as 140-million tonnes of LNG by 2035, or a quarter of current global LNG exports.

It has since suggested this target may have to be delayed.



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