Canada and Russia Join Hands Across the Atlantic for LNG Project

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Petro-Canada Incorporated (NYSE:PCZ)(Calgary, Alberta) and Gazprom (Moscow, Russia) have signed a memorandum of understanding (MOU) to study the feasibility of shipping LNG from Russia to North America. The MOU will investigate all aspects of the value chain including gas production, liquefaction, and regasification.

Under the guidelines of the MOU, Petro-Canada and Gazprom will jointly develop a natural gas liquefaction train at the Baltic port of Ust Luga near the one time Czarist capital of Saint Petersburg, Russia, with a production capacity of 3.5 to 5 million tons per year of LNG. Construction on the $1.1 - $1.3 billion project could begin as early as late 2006, with first production slated for 2009.

Gazprom and Petro-Canada plan to export the LNG to North America where Petro-Canada already has plans for LNG terminal facilities. Petro-Canada is a 50% joint venture owner with TransCanada Pipelines Limited (Calgary, Alberta) (NYSE:TRP) in the planned $450 million Gros Cacouna LNG receiving and regasification terminal to be constructed on the Saint Lawrence River in Quebec, Canada. The receiving terminal will have a planned regasification capacity of approximately 500 million cubic feet per day of natural gas and will export the gas through a planned $225 million 30" diameter 240km pipeline connecting the LNG terminal with Quebec City.

See related article - TransCanada and Petro-Canada Join Forces to Propose Construction of a New LNG Receiving Terminal in Quebec

The output capacity of the LNG production train will be more than enough to supply the Gros Cacouna LNG terminal and so Petro-Canada & Gazprom will be looking for other opportunities to supply LNG to the North American market. Gazprom is one of the largest oil and gas production companies. In 2003, Gazprom produced 19 trillion cubic feet of natural gas, and delivered it to 30 countries worldwide.

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