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The Moscow Times: Shell Made to Pay Out Dividends

Friday, April 27, 2007. Issue 3646. Page 5.

LONDON — Shell and its Japanese partners will make annual payments to the government as part of an agreement that brought Gazprom into their Sakhalin-2 oil and natural gas project, a Shell spokesman said Thursday.

“There have been minor adjustments to fiscal terms while keeping the [production sharing agreement] intact,” Shell spokesman Adam Newton said in London.

The changes “give the Russian government more access to revenues when oil and gas prices are higher and take the Russian government’s view on cost-recovery allowances.”

Gazprom paid $7.45 billion to Shell, Mitsui and Mitsubishi to acquire 50 percent plus one share of the project. The PSA, which governs the ownership structure and the extent to which costs can be recouped before the government gets a share of revenue, was altered in negotiations that culminated in the April 18 transaction.

Russia gained control of the Shell-led project in a Dec. 21 agreement.

Shell refused to disclose the exact terms of the dividend payment, saying only that “there has been no material impact to the value of Sakhalin-2 as a result of the negotiations.” Shell also would not define what constituted a nonmaterial sum.

Peter Hitchens, an equity analyst who covers Shell for Kepler Teathers & Greenwood Merrion in London, said: “For Shell, about $100 million or less would be nonmaterial.” and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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