Royal Dutch Shell has cemented its partnership with Gazprom by discussing asset swaps and how to increase shipments of gas to Japan, where the Fukushima nuclear disaster has caused an energy shortage.

Shell revealed last year that it would let Gazprom share some of its projects abroad if it is allowed to help develop the third and fourth stages of the lucrative Sakhalin island in Russia. Photo: EPA

By Rowena Mason 7:57PM BST 12 Apr 2011

Peter Voser, Shell chief executive, flew to Moscow for meetings with Alexey Miller, the head of Gazprom, where they talked about deals related to Siberia and Asia.

“While discussing the situation on global energy markets, both sides considered the issue of increasing LNG [liquefied natural gas] supplies to Japan from the Sakhalin-2 project as the fastest way to stabilise power supply for its consumers,” a Gazprom spokesman said.

Shell revealed last year that it would let Gazprom share some of its projects abroad if it is allowed to help develop the third and fourth stages of the lucrative Sakhalin island in Russia. Deals could even take the form of asset swaps, as Gazprom seeks to increase its presence on the international stage. Sakhalin is thought to contain reserves of more than 14bn barrels of oil equivalent.

Tuesday’s talks appear to continue a remarkable turnaround in historically strained relations between Shell and Russia.

It was four years since Russia forced Shell to cede control of its $22bn (£14bn) Siberian field, Sakhalin-2, to Gazprom, but it appears that cordial relations have been re-established.

The Anglo-Dutch oil giant was forced to sell down its 55pc stake in Sakhalin-2 to Gazprom in 2006 in a powerful display of Russian resource nationalism.

SOURCE ARTICLE

MOSCOW, April 12, 2011

Russian energy giant Gazprom and Anglo-Dutch oil major Shell discussed joint projects in West Siberia and in the east of Russia, Gazprom’s participation in Shell’s undertakings in third countries and increased liquefied natural gas (LNG) deliveries to quake-hit Japan from the Sakhalin-II project, Gazprom said on Tuesday.

Gazprom head Alexei Miller and Shell CEO Peter Voser held a working meeting on Tuesday to discuss the companies’ interaction under a protocol on global strategic partnership, the Russian energy giant said in a statement.

“The participants in the meeting also discussed the possibilities of joint operations for hydrocarbon refining and distribution in Russia and Europe, and Gazprom’s participation in Shell’s oil and gas exploration and extraction projects in third countries,” Gazprom said.

Miller and Voser also discussed the world energy product market and an increase in LNG supplies to Japan, which was hit by a powerful earthquake and tsunami on March 11. More LNG supplies to Japan are intended to quickly restore Japan’s energy balance.

Earlier reports said Shell may offer Gazprom assets in Asia in exchange for modernization of an LNG plant in Russia under the Sakhalin-II oil and gas project off Russia’s Pacific coast. Shell wants to boost the plant’s output by 50% and raise its stake in the plant.

Shell also plans to get access to new Russian offshore deposits to increase gas supplies to the LNG plant. Shell intends to choose foreign assets that would be of interest for Gazprom to get support from the Russian energy giant.

Gazprom and Shell are exchanging information on oil deposits in West Siberia.

The $22 billion Sakhalin II project, in which Russian gas monopoly Gazprom holds a controlling stake, has estimated reserves of 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas.

The project’s other shareholders are Royal Dutch Shell plc with a 27.5% stake, Mitsui & Co. Ltd. with 12.5% and Mitsubishi Corporation with 10%.

MOSCOW, April 12 (RIA Novosti)

SOURCE ARTICLE

APRIL 8, 2011

MOSCOW (Dow Jones)–Energy giants Royal Dutch Shell PLC (RDSA.LN) and OAO Gazprom (GAZP.RS) will discuss potential asset swaps next week, Gazprom said Friday.

Peter Voser, chief executive of Royal Dutch Shell and Gazprom CEO Alexei Miller will discuss potential asset swaps, said Pavel Oderov, head of Gazprom’s international business department.

Under a memorandum of understanding signed between the two companies last year, Voser and Miller will discuss “potential interesting assets for Gazprom abroad, and potential interesting assets for Shell in Russia,” Oderov said.

-By Jacob Gronholt-Pedersen, Dow Jones Newswires; +7 495 232 9197; jacob.pedersen@dowjones.com

SOURCE ARTICLE

Posted on 31 March 2011

The Russian government must oppose the development of a proposed oil and gas platform off Russia’s Sakhalin Island because the project has not been subject to appropriate environmental risk assessments, according to an international coalition of leading NGOs.

The coalition, which includes WWF, International Fund for Animal Welfare, Pacific Environment and Sakhalin Environment Watch, will submit a Statement of Concern to the Russian Inter-departmental Working Group on the Conservation of Western Gray Whales, a group of oil industry representatives and Russian government officials meeting Friday to discuss off-shore oil exploration near the feeding grounds of the critically endangered Western gray whale.

“The project may have a potentially devastating impact on the critically endangered Western gray whales,” the statement says. “Sakhalin Energy has a legal, social and ethical responsibility to ensure the project does not have unacceptable levels of damage to the marine environment, and the fragile species that live within it.”

The additional platform represents a dramatic expansion of the Sakhalin II project operated by Sakhalin Energy – a consortium of Shell, Gazprom, Mitsui and Mitsubishi – near Piltun Bay, the primary feeding area for Western gray whale mothers and calves. Recent estimates indicate that there could be fewer than 130 whales remaining, and scientific experts note that the death of just 1-2 females per year could lead to population extinction.

“The Russian Inter-departmental Working Group on the Conservation of Western Gray Whales has the future of the Western gray whale as its core responsibility, and must therefore act in the best interest of the whales, not in the interests of oil companies, and recommend that the platform not go ahead,” said Aleksey Knizhnikov of WWF-Russia.

Sakhalin Energy received the necessary approvals for the Sakhalin II project based on just two platforms, with its own analyses indicating that drilling technology advances eliminated the need for a third. The company acknowledged that having two rather than three platforms was preferable due to a “smaller footprint with consequent reduced environmental impact”. Moreover, a previous Sakhalin Energy report shows that the area being proposed for the third platform is unsuitable due to an unstable clay seabed in the earthquake-prone area.

The company plans to conduct a seismic survey this summer to determine the best location for the platform. The environmental groups say that seismic surveys, which involve shooting loud pulses of noise into the ocean floor, can generate an unacceptable level of risk to whales that depend on sound for communication, feeding and navigation. Three seismic surveys were conducted in or near whale feeding habitat last summer and are believed to have caused severe pressure on the animals. Moreover, the Sakhalin Energy seismic survey for 2011 is planned to be undertaken before the effects of previous surveys on the whales have been fully understood.

“It is possible that cumulative impacts of major oil and gas development operations in the whale’s feeding area off Sakhalin Island have had a significant effect on the whale population, and these impacts have yet to be adequately assessed by whale scientists,” said Doug Norlen, Policy Director at Pacific Environment. Other companies operating in the area include Exxon Neftegas Ltd., Rosneft and BP.

The environmental groups are requesting that activities on the third oil platform planned by Sakhalin Energy be dropped as developers have failed to comply with basic operational standards. The organizations highlight the lack of a dedicated environmental impact assessment for all activities associated with the platform as well as a comprehensive review of the collective impacts of current and planned projects in the area.

Patrick Ramage of the International Fund for Animal Welfare called on companies and financial institutions involved to heed the advice of the scientific body monitoring the Sakhalin project. “What’s the rush? The world’s leading experts say industrial development of this sensitive coastline should not proceed until its environmental impact is properly assessed,” Ramage says. “In the wake of the BP disaster and other unfolding environmental tragedies around the world, we hope and believe the companies and institutions involved will reject the sudden effort to fast track a third drilling platform at Sakhalin.”

The Western Gray Whale Advisory Panel, a group of world renowned experts established to provide independent advice regarding the management of risks to Western gray whales, recently emphasized that “a piecemeal approach to assessment of the impacts of oil and gas development on the Sakhalin shelf, in which each new activity or item of infrastructure is considered in isolation, does not constitute ‘good practice’ from an ecological point of view as it dismisses and ignores cumulative or synergistic effects.”

Editor’s notes:

• The Sakhalin Energy document stating that two rather than three platforms “significantly reduces the potential for environmental impact” is available here.
• The most recent report of the Western Gray Whale Advisory Panel (WGWAP) is available here.

For further information:

WWF: Natalia Reiter, email: NReiter@wwfint.org Tel: +41 22 3649550
Pacific Environment: Doug Norlen, email: dnorlen@pacificenvironment.org Tel: +1 202 465 1650
Sakhalin Environment Watch: Dmitry Lisitsyn, email: watch@sakhalin.in Tel: +7 4242 46 16 37
IFAW: Clare Sterling, email csterling@ifaw.org Tel: 020 7587 6708

About WWF

WWF is one of the world’s largest and most respected independent conservation organizations, with over 5 million supporters and a global network active in over 100 countries. WWF’s mission is to stop the degradation of the earth’s natural environment and to build a future in which humans live in harmony with nature, by conserving the world’s biological diversity, ensuring that the use of renewable natural resources is sustainable, and promoting the reduction of pollution and wasteful consumption.

SOURCE

UPI.com

Published: Feb. 8, 2011 at 7:31 AM

MOSCOW, Feb. 8 (UPI) — Royal Dutch Shell could hand some of its assets in Asia over to Russia’s Gazprom in an effort to expand liquefied natural gas options, sources said.

Shell executives are said to be eager to add a third LNG unit at the Sakhalin-2 facility north of Japan. The move would increase output at the plant, Russia’s only such facility, by as much as 50 percent.

The Sakhalin-2 facility started operations in 2009. Shell, which holds a minority stake in the project, said the plant meets 5 percent of the world’s production of LNG when operating at full capacity.

Sources familiar with the possible deal between the two companies said the Sakhalin-2 move follows agreements reached in November to increase bilateral cooperation, reports Bloomberg News.

Both sides, Bloomberg adds, are pondering deadlines for the negotiations but sources revealed little else. Talks in November, sources added, covered oil and gas developments in Siberia as well as overseas work and possible exploration of Russia’s arctic regions.

Russia’s Rosneft and BP reached a deal last month to explore the Russian arctic, though the measure is stalled in a London court.

THE WALL STREET JOURNAL: THE SOURCE

By James Herron: FEBRUARY 3, 2011

Reuters

Sometimes equity markets have a sick sense of humor.

On Tuesday, troubled oil giant BP posted zero growth in fourth quarter adjusted profit, said its oil and gas output had plunged by more than 9% and had a major Russian exploration deal halted by a court order. Its shares closed just over 1% higher.

On Thursday, BP rival Royal Dutch Shell grew its adjusted profit for the quarter by almost 50%, produced 5% more oil and gas and said its flagship gas projects in Qatar were starting up exactly on schedule. Its shares fell more than 3%.

This reaction seems all the more perverse when you consider that both companies posted a similar performance relative to analysts’ expectations– each undershooting by a bit more than 10%. But it demonstrates the divergent paths the two oil giants are taking in the wake of the Deepwater Horizon oil spill and how investors are coming to regard them differently.

Shell continues very much along the traditional path of Big Oil–focussing on growing output, trimming costs and paying out huge dividends every quarter like clockwork. BP has boldly turned off that beaten path by selling major chunks of its assets, ditching production targets, slashing its dividend and cutting risky deals with the Russians.

This could turn BP into what some analysts believe will make it faster growing and, dare I say it, more exciting than its rival.

BP’s woes are well known. It has written off $40 billion for the Deepwater Horizon disaster–pushing it to its first annual loss in 20 years–and has been forced to sell off up to $30 billion of oil and gas production assets and half its U.S. refining capacity to cover that cost. Because of this action, BP’s all-important production rate is plunging just as the oil price hits $100 per barrel again. It produced 15% less oil and gas in 2011 than in the year before the disaster.

This is in stark contrast to Shell, which is just emerging from a successful restructuring and is set to reap the rewards of major long-term investments over the next couple of years. By 2012 it expects its production to have grown by 11% from 2009 and its cash flow to be a whopping 80% higher, even if the oil price were to fall back to $80 a barrel.

Shell will also continue to pay a quarterly dividend of 42 cents a share, giving a yield of 4.5%. BP, after nine months of paying no dividend at all, will now give investors just 7 cents a share, half the pre-spill level, for a yield of 3.6%.

If there ever was an investment no brainer, you’d think this would be it.

“Shell is yielding nearer 4.5% without any of the legal risks that BP still has to face in the U.S.,” said ING analyst Jason Kenney. “Essentially, Shell looks lower risk and higher return from an income fund perspective.”

However, it is important to remember that once BP completes its current painful downsizing, its dividend growth prospects are better than that of Shell, Kenney said. There is also, “a potential wall of cash that is possible for BP by end 2013 due to U.S. escrow commitments ending, partner cost recovery, further divestment income and the benefits of superior growth,” he said.

BP’s new venture to explore for oil in Russia’s Arctic in partnership with Rosneft, assuming the deal isn’t blocked by the troublesome Russian partners in TNK-BP, also offers more tantalizing growth prospects into the long-term than are apparent from Shell’s pact with Gazprom. And although BP CEO Bob Dudley’s bold moves since Deepwater Horizon carry their risks, they certainly make a compelling story for investors to get behind.

BP may not be so tempting to the income funds that love Shell’s yield, but others seem to like its prospects.

SOURCE ARTICLE WITH COMMENTS

BP Photo: AFP/Getty Images

The Telegraph: Gazprom and Shell to develop energy projects together

A new “special relationship” between Royal Dutch Shell and Russian state gas giant Gazprom will see the two companies develop more energy projects together.

Shell has agreed to let Gazprom share some of its projects abroad if it is allowed to help develop the third and fourth stages of the Sakhalin project

By Rowena Mason 8:31PM GMT 30 Nov 2010

By JAMES HERRON

LONDON—Royal Dutch Shell PLC and Russian gas giant OAO Gazprom signed an agreement on Tuesday that will deepen their existing partnership within Russia and see them work together outside Russia for the first time, Shell said in a statement.

The agreement promises “further development of bilateral cooperation in exploration and production of hydrocarbons in western Siberia and the far east of Russia [and] cooperation in the downstream oil products business in Russia and Europe, as well as Gazprom participation in Shell upstream projects outside of Russia,” Shell said.

The pact was signed in Moscow by Gazprom Chief Executive Alexey Miller and Shell CEO Peter Voser. It will give Gazprom “new large-scale projects and growing joint presence in new markets,” said Mr. Miller.

“This underscores the strong partnership our companies have built in recent years,” said Mr. Voser. Gazprom and Shell are already partners in the Sakhalin-2 liquefied natural-gas export project in Russia’s far east, although Gazprom’s entry only came about after sustained pressure from the Russian government for Shell to cede control of the project.

“We are happy to invite foreign partners to develop our upstream reserves, but only if in exchange we get the access to their first class projects somewhere in the world,” said Gazprom Deputy Chief Executive Alexander Medvedev on Monday. “We do know Shell has good assets, which could be of interest for us.”

Under former Chief Executive Jeroen van der Veer, Shell discussed participating in the development of huge energy resources in the remote Yamal Peninsula, which are seen as vital to Russia’s ability to meet future demand for natural gas.

“Russia is an important area for new energy development for Shell and I expect it will play a big role in meeting the world’s growing demand for oil and gas in the years ahead,” said Mr. Voser.

WSJ ARTICLE

By Stephen Bierman – Sep 24, 2010

By James Paton – Aug 26, 2010 4:48 AM GMT+0100