Royal Dutch Shell Plc  .com Rotating Header Image Russia industry: Shell interested in building additional LNG terminals on Sakhalin Island

(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY BRIEFING


Oil major Royal Dutch/Shell (Netherlands-UK), which at end-2006 agreed to sell its controlling stake in the Sakhalin-2 oil and gas project to state-controlled energy major Gazprom, has indicated that it is considering building additional LNG terminals on Sakhalin Island, if the company is allowed access to other oil and gas reserves in Russia.

Following pressure from the Russian authorities over a series of environmental infractions at the Sakhalin-2 project, Shell and its partners in the venture, Mitsui and Mitsubishi (both Japan) agreed to sell stakes in Sakhalin Energy, the consortium that manages the Sakhalin-2 oil and gas project, to Gazprom for US$7.45bn.

Prior to the sale the Russian authorities had temporarily halted construction work on the island and at the projects offshore facilities.

Among the plans for Sakhalin-2 is the construction of Russias first LNG processing plant, work on which was 95% completed before the construction ban was imposed last year. Current plans call for the LNG terminal to house two production lines, each with annual capacity of 4.8m tonnes, which represents around 8% of the world’s current demand for LNG.

Shell has indicated that it could increase the capacity at the LNG terminal by adding additional processing lines, if Gazprom agrees to allow Shell rights to explore additional gas deposits in the area of Sakhalin Island in partnership with the Russian energy giant.

SOURCE: Business Eastern Europe

Copyright 2007 Economist Intelligence Unit

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