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Royal Dutch Shell Plc .com: Gazprom may bring Japan firms into Baltic LNG plant

FROM Reuters
Thu Jun 22, 2006 12:34am ET

MOSCOW, June 22 (Reuters) – Russia’s Gazprom (GAZPq.L: Quote, Profile, Research) is considering inviting Japan’s Mitsui (8031.T: Quote, Profile, Research) and Mitsubishi (8058.T: Quote, Profile, Research) as equity partners in its liquefied natural gas (LNG) project on the Baltic Sea, the gas monopoly said on Thursday.

Gazprom has previously said it may build the plant together with Canada’s PetroCanada (PCA.TO: Quote, Profile, Research).

The deal with the two Japanese firms may unlock a stalled negotiation between Gazprom and Royal Dutch Shell (RDSa.L: Quote, Profile, Research) over Gazprom’s plan to take 25 percent of the Shell-led Sakhalin Energy project in Russia’s Far East.

Shell and Gazprom have an agreement in principle to allow Gazprom into the Sakhalin project by means of a swap deal. In return for the stake, Shell would get the deep deposits of Gazprom’s huge Zapolyarnoye field.

But last year Shell doubled the cost estimate for Sakhalin Energy from $10 billion to $20 billion, destroying the neat mathematics of the planned swap.

Gazprom and Shell had said Mitsui and Mitsubishi, the other two partners in Sakhalin Energy, might have to give up some equity in order to make the swap deal work. Neither firm had said what the Japanese firms might receive in return.

© Reuters 2006. All Rights Reserved.

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