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THE WALL STREET JOURNAL: Gazprom, Shell Mull Siberia Plant

June 20, 2006

OAO Gazprom and Royal Dutch Shell PLC are thinking about building a gas-to-liquids plant in Western Siberia in a project potentially valued at $8 billion, Gazprom said.

The Russian gas monopoly is considering building a 12 billion-cubic-meter gas-to-liquids plant in Nadym with Shell, said Gazprom Deputy Chief Executive Alexander Ryazanov.

Shell confirmed it had entered talks with Gazprom, but it stressed that discussions were at an early stage and declined to put a potential value on the project.

The estimate that Mr. Ryazanov gave for investment in the project, Russia’s first GTL plant, would put it on a par with Shell’s proposed investment in the world’s biggest GTL plant in Qatar. Shell has said a final investment decision on Pearl, a venture with Qatar Petroleum, is due this year.

GTL technology processes natural gas into clean oil products such as low-sulphur diesel, which is increasingly in demand to meet tightening restrictions.

Gazprom said a move into GTL would make sense, because the cost of pumping gas from some fields is rising as output from those fields declines.

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