Daily Telegraph: Shell signs asset swap with Russian gas giant

Daily Telegraph: Shell signs asset swap with Russian gas giant

“The Shell chief denied suggestions that there had been pressure from the Kremlin to give Gazprom a stake in Sakhalin II, which is Shell’s biggest ever energy project. He added: “We were absolutely not forced. We always felt that it was logical to have a Russian partner in Sakhalin.”

Friday 8 July 2005

By Christopher Hope, Business Correspondent (Filed: 08/07/2005)

Shell, the Anglo-Dutch oil and gas giant, has agreed a multi-billion dollar asset swap with Gazprom, Russia’s state-owned gas giant, to boost its reserves of oil and gas.

Jeroen van der Veer, Shell’s chief executive, said the deal “tees up” future acquisitions for Shell in Russia, one of the most resource-rich countries in the world.

Shell is cutting its stake in the $10billion Sakhalin-II oil and gas project off the east coast of Siberia from 55pc to 30pc, handing the 25pc stake – equal to 1billion barrels of oil equivalent – to Gazprom. The stakes of the other investors – Mitsui (35pc) and Mitsubishi (20pc) – are unaffected.In return, Gazprom has given Shell a 50pc stake, equivalent to 1.5billion barrels, in its less developed Zapolyarnoye-Neocomian field, which has 400billion cubic metres of gas, four time zones away in western Siberia, as well as handing over unspecified assets and some cash.

Speaking shortly after signing the deal in London, Mr Van der Veer said: “Today strengthens the good relationship between Shell and Gazprom and is a basis for further co-operation on integrated gas projects both in Russia and internationally.”

Mr Van der Veer described the deal as a “win-win” situation for both companies, giving Gazprom an entry to sell gas into the lucrative American and Asia-Pacific market while Shell was gaining more reserves in Russia.

The deal will take about a year to complete and will have no bearing on Shell’s reserves tally this year. Shell is recovering its credibility by restructuring its bureaucratic structure after losing 25pc of its “proven” oil and gas.

Mr Van der Veer said the deal “tees up other deals” Shell to strengthen further the company’s investments on Russia. He continued: “This gives us a platform for other deals for more assets.”

The Shell chief denied suggestions that there had been pressure from the Kremlin to give Gazprom a stake in Sakhalin II, which is Shell’s biggest ever energy project. He added: “We were absolutely not forced. We always felt that it was logical to have a Russian partner in Sakhalin.”

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