Royal Dutch Shell Plc  .com Rotating Header Image

Bloomberg: Shell Interested in Russia’s Shtokman Gas Field If Invited

By Ellen Pinchuk and Stephen Voss

June 9 (Bloomberg) — Royal Dutch Shell Plc, Europe’s largest oil company, would like to participate in developing Russia’s Shtokman field if invited to do so by state-run OAO Gazprom, Shell’s chief executive officer said.

Rival companies including Statoil ASA and Total SA have been given a second chance to help develop Shtokman. The field is Russia’s largest untapped gas deposit and lies under Arctic waters off the coast of Siberia.

“First we have to be invited to the party,” Shell chief Jeroen van der Veer said today in an interview at the St. Petersburg International Economic Forum in Russia. “Shell are the leaders in liquefied natural gas in the world and we know how to build and operate projects. And we expect liquefied natural gas will play a major role for the Shtokman development.”

Gazprom, which had intended to allot stakes in Shtokman to two or three foreign companies, called off the competition in October, saying it wouldn’t share ownership. Later, in January, Gazprom officials said they’d offer service contracts, rather than equity stakes, to companies with technology such as LNG plants.

“If we are invited to the party we will certainly study that very closely,” Van der Veer said. “We have experience working in the Arctic in other parts of the world.”

Shell, like other major oil companies, wants to secure access to resources in major producing countries and bolster its proven reserves. The company’s oil and gas production declined 1 percent last year amid stoppages and disruptions in Nigeria, where it is the largest foreign operator.

Majority Stake

Shell will also have to reduce its “booked” reserves in Russia after selling half of its majority stake in the Sakhalin-2 project to state-run Gazprom in a transaction that concluded in April. Shell’s last disclosure of proven reserves was for the end of December, and didn’t include the changes in Sakhalin.

Shell in 2006 was forced to cede control of the $20 billion Sakhalin-2 oil and gas project to Gazprom in an agreement last December after Russian regulators took steps to derail the project on environmental grounds. Shell’s equity was reduced to 27.5 percent from 55 percent. Originally, Shell wanted to swap part of its Sakhalin-2 stake for equity in another Russian field, Zapolyarnoye, rather than take cash.

Through Sakhalin-2, Shell and Gazprom are now partners in what will become the country’s first export project for LNG, which is natural gas cooled and condensed into liquid form so it can be shipped by tanker. The venture has already committed to selling most of its gas to utilities in Japan, Korea and North America.

To contact the reporters on this story: Ellen Pinchuk in St. Petersburg at [email protected] ; Stephen Voss in St. Petersburg at [email protected]

Last Updated: June 9, 2007 11:10 EDT

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.