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Bloomberg: Gazprom Says Shell Makes Offer for Russia’s Sakhalin Venture (Shell Surrenders?)

By Torrey Clark

Dec. 11 (Bloomberg) — OAO Gazprom said Royal Dutch Shell Plc made new proposals for the $22 billion Sakhalin-2 oil and gas venture, following months of criticism by the Russian government over the project’s environmental record.

“We are analyzing the proposals,” Gazprom spokesman Sergei Kupriyanov said today in an e-mailed response to questions. “A decision will be made taking into consideration the Sakhalin-2 project’s existing problems, including environmental.” He declined to elaborate.

Shell Chief Executive Officer Jeroen van der Veer met last week in Moscow with Gazprom CEO Alexei Miller and Russian Energy Minister Viktor Khristenko for talks, Maxim Shoob, vice president of Shell’s Russia unit, said by phone from Moscow.

He declined to comment on a Reuters report that cited unidentified industry people as saying that Shell had agreed in principle for Gazprom to gain a majority stake in the project.

“The talks on Friday were positive and constructive,” Shell spokesman Andre Romeyn said by phone from The Hague. The nature of the talks weren’t disclosed. Romeyn declined to comment on whether Shell would issue a statement later today.

Sakhalin-2, Russia’s only major oil and gas project fully owned by foreigners, faces environment audits and the possible loss of permits as investors negotiate a $10 billion budget increase with the government and a share swap with Gazprom, the state-run natural gas export monopoly. The project is key to Shell’s plans to revive output and boost reserves.

To contact the reporter on this story: Torrey Clark in Moscow at [email protected] .

Last Updated: December 11, 2006 03:19 EST

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