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The Times: Shell plans huge collaboration in Siberia

Royal Dutch Shell is planning a vast oil and gas project on the remote Yamal peninsula in northwest Siberia.

November 8, 2007
Robin Pagnamenta

The collaborative effort to tap into reserves in the Russian Arctic will involve Gazprom and other local companies, according to Jeroen van der Veer, Shell’s chief executive. Speaking after talks in Moscow between President Putin and a high-level Dutch business delegation, Mr van der Veer said: “It is not like building a house – it is like building a city. It will take a very long time. And of course we will work with Russian companies.” Mr van der Veer described the project as “a huge-scale long-term liquid gas and oil project”.

The 435-mile Yamal peninsula is thought to contain one of the world’s largest virtually untapped reserves of natural gas. It is believed to be more than 10 trillion cubic metres, or about one third of the total reserves held by Gazprom, Russia’s state-controlled gas monopoly.

To access it on a commercial scale, Gazprom and its partners will need to establish major infrastructure to start producing and moving gas either through pipelines or by ship as liquefied natural gas and then on to markets in Europe and beyond. Any major infrastructure project designed to access gas from Yamal – which means “end of the world” in the language of the Nenets, its indigenous inhabitants – is likely to involve an investment of tens of billions of dollars, analysts believe.

Gazprom this year teamed up with Total, of France, and Norway’s StatoilHydro to help to develop another huge gas deposit, which is thought to be up to 3.7 trillion cubic metres, in the Shtokman region of the Barents Sea.

That project is expected to cost more than $20 billion (£9.5 billion), but the Yamal project is thought likely to be on an even larger scale.

Shell has been eager to identify opportunities in Russia after it was forced to surrender control of the $22 billion Sakhalin project to Gazprom last year. The Anglo-Dutch group still has a 25 per cent share in Sakhalin2 and also controls the Salym oil project in Siberia.

Gazprom intends to produce its first 15 billion cubic metres of gas on Yamal in 2011 and gradually to raise output to 250 billion cubic metres a year, or almost half its total output.

The project will involve laying pipelines hundreds of kilometres to reach Gazprom’s Nadym-Purtaz production region. Mr van der Veer said: “You have to develop huge infrastructure, in this case giving huge commercial opportunities for Russia. We expect huge reserves there.”

Russia’s total reserves of natural gas are thought to be about 48 trillion cubic metres, by far the world’s largest. Iran has the second-largest reserves, which are estimated to be 28 trillion cubic metres.

— BP and Gazprom, the state-control-led Russian gas monopoly, are in talks about the possibility of Gazprom buying into TNK-BP, BP’s Russian business. BP owns 50 per cent of TNK-BP, Russia’s third-biggest oil producer. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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