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(Reuters; June 29) -- Gazprom has agreed to a feasibility study to expand Russia's only liquefied natural gas plant, a victory for its partner Shell, which has urged the state-run gas monopoly to seize a market opportunity in the Pacific. CEO Alexei Miller told a news conference June 29 that Gazprom would do a preliminary front-end engineering and design study on expanding the plant on the Pacific island of Sakhalin from an average daily capacity of 1.3 billion cubic feet of gas per day to 2 bcf per day.

The Gazprom boss said the study would be finished by the end of the year. He also said Gazprom was no longer considering a pipeline to Tokyo, which could have siphoned gas away from an expanded Sakhalin-2 plant, and would consider only LNG sales to Japan. Shell executives have argued that Sakhalin is best positioned to increase supply to Japan after the Fukushima nuclear disaster, while the battle for market share in Asia would grow fiercer with time.

The project currently sells much of its output to Japan. It ramped up volumes to meet additional Japanese demand when nuclear capacity was shut down after last year's Fukushima nuclear plant disaster.

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