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Reuters: Gazprom and Shell call news conference

Wed Apr 18, 2007 2:31 PM BST

MOSCOW, April 18 (Reuters) – Russian gas monopoly Gazprom and Royal Dutch Shell called a news conference on Wednesday at the end of a third day of talks to close their $7.45 billion Sakhalin-2 deal.

Industry sources had said only procedural steps remained before the deal could be completed and there would be no material changes to the agreement reached in December.

Officials at both firms said they would call a news conference once it was finally sealed.

The two firms and Shell’s two Japanese partners struck a preliminary deal in December for Gazprom to take a 50 percent stake in the huge energy project and hoped to complete the details in the first quarter of this year.

Under the deal, Gazprom will pay cash to Shell and its Japanese partners Mitsui <8031.T> and Mitsubishi <8058.T>, becoming the leader of the project.

The deal followed months of pressure on the project by Russian environmental authorities and was interpreted by analysts as yet another step in the Kremlin’s drive to win more control over Russia’s huge energy industry.

The Kremlin was angered by Shell’s request almost to double the cost of the huge liquefied natural gas (LNG) project to $22 billion.

Shell and its Japanese partners will each dilute their stakes by half, leaving them with 27.5 percent, 12.5 percent and 10 percent, respectively.

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