By Bradley Cook
Dec. 17 (Bloomberg) — Shareholders of Royal Dutch Shell Plc’s Sakhalin-2 venture will meet with Russian Energy Minister Viktor Khristenko in Moscow this week as Russia’s gas-export monopoly OAO Gazprom seeks a stake in the $22 billion project.
Khristenko will hold “a regular meeting” with shareholders of Sakhalin-2 next week, the energy ministry said on its Web site late yesterday. The last meeting was Friday, the ministry said.
Gazprom, based in Moscow, is seeking to join Sakhalin-2, the last major energy project in Russia fully owned by foreigners. Shell owns 55 percent of the oil and gas development and Mitsui & Co. and Mitsubishi Corp. of Japan own 25 percent and 20 percent, respectively.
Gazprom may acquire a controlling stake in Sakhalin-2, said Dmitry Medvedev, President Vladimir Putin’s former chief of staff and now first deputy prime minister, last week. Shell Chief Executive Officer Jeroen van der Veer met with Gazprom CEO Alexei Miller the past two Fridays in Moscow. Mitsubishi President Yorihiko Kojima and Mitsui President Shoei Utsuda were also in Moscow on Dec. 15, company spokesmen said.
Shell’s doubling of Sakhalin-2’s cost estimates to $22 billion means less revenue for Russia under a production sharing agreement signed a decade ago, when oil prices were lower. Shell and its partners have so far spent about $12 billion.
The venture, which is developing fields off Sakhalin Island, north of Japan, is key to Shell’s plans to revive output and boost reserves. The Hague-based Shell is still recovering from the 2004 accounting review that forced it to reduce proven reserves by 5.63 billion barrels, or 29 percent.
Tokyo Electric and other Japanese utilities have agreed to buy a combined total of at least 4.5 million tons of liquefied natural gas a year from Sakhalin-2, which will be the closest LNG project to Japan. The venture plans to produce about 9.6 million tons a year of LNG, which is gas supercooled to liquid for transport by tanker.
To contact the reporter on this story: Bradley Cook in Moscow at [email protected] .
Last Updated: December 17, 2006 05:22 EST
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