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MarketWatch: Gazprom, Shell CEO’s meet to discuss Sakhalin-2

Last Update: 6:59 AM ET Dec 15, 2006

MOSCOW (MarketWatch) — The chief executives of OAO Gazprom (GSPBEX.RS) and Royal Dutch Shell PLC (RDSB) met Friday in Moscow to discuss the Sakhalin-2 oil and gas project on Russia’s Pacific coast, the Russian gas monopoly said in a statement.

Gazprom said its CEO Alexei Miller and Shell CEO Jeroen van der Veer discussed Shell’s offer for Gazprom’s participation in the development, although it didn’t give any further details.

Both Gazprom and Shell declined to give any details of the meeting.

The two companies are currently discussing Gazprom’s entry into Shell’s Sakhalin-2 project, as Shell prepares to cede part of its 55% stake in Sakhalin-2 operator Sakhalin Energy Ltd. Gazprom CEO Dmitry Medvedev said this week the Russian firm may be satisfied with less than a majority stake in the development.

The presidents of Mitsui & Co. (8031.TO) and Mitsubishi Corp. (8058.TO) are on a business trip to Russia for talks on the Sakhalin-2 oil and gas project, spokesmen for both companies said Friday. Both Japanese firms hold significant minority stakes in Sakhalin Energy.

Sakhalin Energy has come under intense regulatory pressure from Russian officials who have accused it of a wide array of environmental violations and threatened to pull key production permits.

Many observers believe, however, the pressure is part of a Kremlin effort to raise its influence over Russia’s vast natural-resources sector.

Sakhalin Energy said earlier this week it would probably will miss a January target to start drilling for natural gas at the offshore Lunskoye field. It also said the inability to begin drilling at the Lunskoye gas field calls into question the 2008 start date for exports of liquefied natural gas to Pacific rim countries.

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