ST. PETERSBURG, June 10 (RIA Novosti) - Natural gas produced as part of the Sakhalin I project off Russia's Pacific coast will be processed domestically, not in China, but Russia will honor its commitment on supplies to the Asian nation, a Gazprom official said Sunday.
Stanislav Tsygankov, head of foreign economic ties at the Russian monopoly, said Gazprom [RTS: GAZP] planned to complete talks on gas supplies with energy-hungry China before the year's end.
"We held talks yesterday and agreed to meet again shortly to discuss conditions," Tsygankov said, adding Gazprom had confirmed its obligation to supply 30-38 billion cu m of gas a year.
But he said the construction of a gas pipeline to China would not start until the agreement was signed.
Tsygankov said talks with China had been difficult. "Successful negotiations is a matter of compromise, which we have so far failed to reach," he said, referring to China's protocol on gas supplies with the U.S. giant ExxonMobil, which runs Sakhalin I.
"China believes it will receive gas from Exxon," Tsygankov said, adding Sakhalin I gas would in the first instance be used to meet Russia's domestic demand.
Sakhalin I is expected to produce about 258 million metric tons (1.89 billion barrels) of oil and 356 billion cubic meters of natural gas over its lifespan.
