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Alexey Miller, Chairman of the Gazprom Management Committee and Alexander Drozdenko, Governor of the Leningrad Oblast Region have signed a Memorandum of Understanding and Cooperation with regard to the construction of a liquefied natural gas (LNG) plant.

The signing ceremony took place in the presence of Russian President, Vladimir Putin, as part of the St. Petersburg International Economic Forum 2013.

In a statement, Gazprom said that under the agremement, both parties will 'use their best endeavours' to prepare and develop an LNG plant project on the coast of the Gulf of Finland.

Gazprom added that the Leningrad Region Government will ensure that necessary approvals are granted by authorized regulatory bodies and local authorities, relevant permits are issued and Gazprom's ownership rights to constructed facilities and purchased lands are registered.

"Gazprom has taken the decision to launch a fundamentally new and ambitious project – the construction of an LNG plant in the Leningrad Region. I mean the project that we announced recently. The plant capacity will be 10 million tonnes per year. Today we have started developing an Investment Rationale and selecting a construction site," said Miller.

According to media reports, the new facility is also expected to be equipped to produce LNG as bunker fuel as Gazprom and port operator, Summa Group, signed a memorandum of understanding (MoU) in September 2012 to study the possibility of supplying liquefied natural gas (LNG) as a bunker fuel to ships and building storage facilities in the North and Baltic Seas.

Gazprom has an involvement in the marine fuels industry via Gazprom Neft Marine Bunker LLC, which was established in 2007. In 2011, the company was estimated to have an 18.5 percent share of the Russian bunker market with sales volumes of 2.2 million tonnes.

As the world's largest gas producer, Gazprom will be keen to promote the use of LNG to power ships as a greener and cheaper alternative to fuel oil. According to a recent forecast by Deutsche Bank AG, global demand for LNG will more than double by 2025.