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New York Times: Gazprom Seeks 50% of Shell Gas and Oil Project

By ANDREW E. KRAMER
Published: December 13, 2006

MOSCOW, Dec. 12 — Gazprom hopes to buy up to 50 percent of Royal Dutch Shell’s $20 billion Sakhalin Island development, Dmitri A. Medvedev, Russia’s deputy prime minister, said Tuesday, signaling a large future role for the company in the venture.

After months of pressure from Russian environmental regulators, Shell offered to sell a stake in its oil and gas development to Gazprom, which is controlled by the Russian government. Shell effectively agreed to renegotiate the terms of its 1990s investment in Russia under pressure from the government of Vladimir V. Putin.

Mr. Medvedev, who is also chairman of Gazprom’s board, told journalists at a briefing here that company executives and Kremlin officials were meeting this week. He suggested that the talks were focusing on a buyout price.

“The format of the final agreements has not taken shape,” Mr. Medvedev said. “It is very important to estimate, before entering the company, the money that has to be paid, the expenditures that Shell had in the course of the implementation of Sakhalin 2. All these issues are at the stage of active discussion.”

Mr. Medvedev offered no specifics and did not say how much of Gazprom’s future stake would come from Shell, which owns 55 percent of Sakhalin 2 and operates the venture, and how much from two Japanese trading companies, Mitsui and Mitsubishi, which own the remainder.

A report on Tuesday in Kommersant, a newspaper owned by a businessman affiliated with Gazprom, said that for Gazprom to own 50 percent, Shell would offer 30 percent and Mitsui and Mitsubishi would each sell 10 percent.

Last week, Shell offered 25 percent plus some measure of operational control for Gazprom, said a political risk adviser representing one of the companies, who was not authorized to speak publicly. This was not immediately accepted, he said. Neither company would comment openly on the negotiations.

For a second day, a Shell spokesman characterized the talks with the phrase “positive and constructive.”

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