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Shell, Gazprom Agree to Study Arctic LNG Projects (Update2)

Bloomberg

 

 

Shell, Gazprom Agree to Study Arctic LNG Projects (Update2) 

By Lyubov Pronina and Greg Walters

June 7 (Bloomberg) — Royal Dutch Shell Plc and OAO Gazprom, Russia’s gas exporter, signed a preliminary agreement to study liquefied natural gas projects on the Yamal peninsula in Russia’s far north.

The companies may also consider LNG projects in third countries, Shell Chief Executive Officer Jeroen van der Veer said in an interview at the St. Petersburg International Economic Forum today.

“This will not happen overnight. This is a first step,” van der Veer said, declining to name a start date for joint projects or an investment amount.

Russia’s Arctic Yamal peninsula and the surrounding Kara Sea may hold more than 30 trillion cubic meters of gas, enough to supply the world for a decade, according to a presentation made by Shell and its partners in the Kremlin last year.

Van der Veer, who met with Gazprom CEO Alexei Miller today, said he was “satisfied” with the companies’ joint Sakhalin-2 project, Russia’s first LNG project.

“We have to bring something to the table that Russian companies don’t yet have,” van der Veer said. “That can be LNG technology, other technologies, large-scale project management as on Sakhalin.”

Sakhalin-2

Shell was forced to sell control of its $22 billion Sakhalin-2 oil and gas project in Russia’s Far East to Gazprom after regulators threatened to halt the development.

Van der Veer and his counterparts in Dutch companies including Essent NV and Nederlandse Gasunie NV told then Russian President Vladimir Putin in November that development of the Arctic region may cost “several hundred billion” dollars and take more than 50 years, according to a slide presentation received from gas trader GasTerra BV.

The presentation included plans for building artificial islands and “barge-based floating” LNG facilities. The Yamal region, north of the Arctic Circle, “poses extreme development challenges.” Rail, road and shipping routes “are yet to be built,” the proposal said.

To contact the reporters on this story: Lyubov Pronina in St. Petersburg at[email protected]Greg Walters in Moscow[email protected]

Last Updated: June 7, 2008 11:01 EDT

 

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