* Gazprom expects Sakhalin-1 to liquefy own gas
* Russia opening up LNG exports to Gazprom's rivals
* Gazprom may link China gas deal to Asian products basket
* Says no pressure on China deal from Turkmenistan gas (For other news from Reuters Russian and Eastern EuropeInvestment Summit, click on http://www.reuters.com/finance/summits)
By Denis Pinchuk
YUZHNO-SAKHALINSK, Russia, Sept 24 (Reuters) - Gazprom has halted talks on buying gas from the ExxonMobil-led Sakhalin-1 project after years of fruitlessattempts to secure a deal, Deputy Chief Executive AlexanderMedvedev told Reuters.
Slim hopes for an agreement have been dashed by the prospectthat Gazprom, having failed to finalise a gas export deal withChina, might lose its monopoly on liquefied natural gas exports.
The state-controlled gas giant had wanted to buy upproduction from Sakhalin-1 to supply Russia's Far East. ButExxon, with its partner Rosneft, now plans a $15billion LNG project to supply the Asia-Pacific.
"We are not in discussions; they will liquefy gas bythemselves," Medvedev told the Reuters Russia Investment Summiton Tuesday. He did not elaborate on the reason behind thedecision.
Gazprom exports LNG from its own Sakhalin-2 project, whichis already up and running and has annual capacity of 10 milliontonnes.
But even as Gazprom seeks to pivot away from a weak Europeanexport market, the company has opened a door to rivals byfailing to clinch a long-awaited deal to supply gas by pipelineto China.
Rosneft, along with independent gas firm Novatek,has lobbied to end Gazprom's monopoly on gas exports, with anenabling proposal now before the government.
Gazprom also plans to expand existing Sakhalin-2 capacityand build up a new LNG plant in the Russian Pacific coast nearVladivostok.
CHINA DEAL
Gazprom this month signed a heads of agreement with Chinaaiming to reaching a final supply deal by the end of this year,and Medvedev signalled greater flexibility on the pricing basisfor future supplies.
He said that Gazprom might use an Asian oil products basketas a benchmark for pricing gas that it plans to supply to China.
Gazprom has for decades pegged its long-term supply dealswith European customers to oil products prices, although buyershave pushed for - and won - greater linkage to the 'spot' marketprice for gas on exchanges.
Sticking to the oil-price link in China sales would defendGazprom's export pricing model from pressures arising from therelative abundance of natural gas in relation to oil.
"A given formula can lead to completely divergent results,"Medvedev said. "Therefore we will find an indexation method and,most importantly, a base price. The talks are going normally."
He told reporters earlier on Tuesday that Gazprom did notexpect to use the "Japanese Crude Cocktail", which is seen as anexpensive mix, as the benchmark for China.
Chinese state energy firm CNPC has, meanwhile, securedanother 25 billion cubic meters (bcm) of gas per year fromTurkmenistan in addition to the 20 bcm shipped in 2012.
In the medium term, China may buy as much as 65 bcm a yearfrom Turkmenistan, once a major supplier for Gazprom which hasbecome a competitor after the opening of an eastern exportroute.
Medvedev, speaking to Reuters, dismissed suggestions thatGazprom has come under pressure as a result of the new Turkmendeal, saying its own negotiations are not linked to Ashgabat'sprice formula with Beijing.
"They (Turkmens) are not pressing us, they have their ownlife and we have our own."
Gazprom had initially planned to ship up to 68 billion cubicmetres of gas per year via two routes to China. It laterprioritised the more eastern route that would supply 38 bcm peryear with a plan to start in 2018. (Additional reporting by Oleg Vukmanovic in London; writing byVladimir Soldatkin and Katya Golubkova; editing by Jane Bairdand Jane Merriman)
