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Yahoo! Asia News: Gazprom sees Shell deal delayed beyond 2006

AMSTERDAM, June 8 (Reuters) – Russia’s Gazprom and Royal Dutch Shell have delayed a major asset swap deal beyond 2006 after Shell reported a huge cost overrun on its Sakhalin project last year, Gazprom said on Thursday.

“The capital costs for Sakhalin-2 are rising and negotiations might take longer than expected,” Gazprom’s export chief Alexander Medvedev told a news conference.

“It is important for the Russian government to understand the concequences well. I think it will take a lot more time than the end of the year,” he added. Last year Shell doubled its cost estimates for Sakhalin-2 to $20 billion.

Gazprom wants to get 25 percent in the Shell-led Sakhalin-2, which will be the world’s largest liquefied natural gas project, and offer in exchange up to 50 percent in the lower deposits of its giant Siberian Zapolyarnoye field.

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