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Exxon says Sakhalin-1 gas should be exported

image Exxon Mobil believes Russia should allow the U.S. oil major to export gas from its Sakhalin-1 project off Russia's east coast because, contrary to Gazprom's claims, the gas is not needed for the local market.

"We are currently supplying the local market and fulfilling all of the local market's capacity needs," Exxon's head of oil and gas production for Europe, the Caspian and Russia, Robert Olsen, told Reuters in an interview on the sidelines of the International Petroleum Week conference.

"The local market, I don't believe, is any way large enough to absorb the full development of Sakhalin-1."

Exxon signed a preliminary agreement to sell gas to China in 2006 and planned to supply this via pipeline.

However, Russian gas export monopoly Gazprom asked the Russian government in June to block Exxon from selling Sakhalin gas in Asia, saying the output was needed for Russia's domestic market.

Gazprom is the majority shareholder in the Sakhalin-2 project, also off the coast of Sakhalin Island in east Russia, which plans to export liquefied natural gas -- gas supercooled to liquid so it can be shipped in pressurised tankers.

Olsen said Exxon had discussed other options for the export of Sakhalin-1 gas, apart from the Chinese deal, noting the East Asia region had a developed gas market.

"We are optimistic that that reserve will ultimately find a marketplace that is attractive," Olsen said.

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