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AFX Europe (Focus): Gazprom wants Shell to re-negotiate Sakhalin-2 asset swap terms

AFX Europe (Focus): Gazprom wants Shell to re-negotiate Sakhalin-2 asset swap terms

“Gazprom now demands that the deal is renegotiated after Shell was forced to admit last week that the cost of the Sakhalin-2 gas field project had overrun by an estimated 10 bln usd and could now cost 20 bln.”

Posted Monday 18 July 2005

LONDON (AFX) – Russian gas giant OAO Gazprom is demanding that Royal Dutch/Shell re-negotiate the terms of a planned asset swap because of the soaring costs of the Sakhalin-2 project, the Sunday Telegraph reported.

It said that under a deal with the Anglo-Dutch oil giant signed two weeks ago, Gazprom had agreed to take a 25 pct in the Sakhalin-2 gas field on Russia’s Pacific coast.

In exchange, Shell would take a 50 pct stake in the Zapolyarnoye field in Siberia, the world’s fifth largest gas deposit.

However, Gazprom now demands that the deal is renegotiated after Shell was forced to admit last week that the cost of the Sakhalin-2 gas field project had overrun by an estimated 10 bln usd and could now cost 20 bln.

Gazprom said the rising costs of the Sakhalin field and the anticipated delays in making the first shipments of gas have lowered the value of the project.

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