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Exxon pressured by Russian pipeline

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Exxon pressured by Russian pipeline

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With Prime Minister Vladimir Putin on hand for a ceremony marking the event, Russia’s Gazprom has started work on a pipeline from the off-shore Sakhalin oil and gas fields to the Pacific port of Vladivostok where it can connect with existing pipes to the Russian far east.

The project puts pressure on Gazprom’s partner, the major US energy company Exxon Mobil, to sell gas to domestic consumers in Russia’s far east rather than liquefy it and send it by sea to Asian countries. Putin said the priority will be the domestic market. The problem for Exxon is that it can get up to three times as much for gas exported to China and Japan because the price for Russian domestic consumers is capped by the state, but analysts said it will have little choice but to reach agreements with Gazprom.