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Shell, Gazprom sign LNG, pipeline supply agreements

Reuters

Wed Apr 8, 2009 3:40pm EDT

NEW YORK, April 8 (Reuters) – Royal Dutch Shell (RDSa.L) and Russian gas giant Gazprom signed a series of gas supply agreements on Wednesday under which both parties will buy LNG from the Sakhalin II project in eastern Russia over 20 years.

Starting this year, Gazprom Global LNG and Shell Eastern Trading will buy 1 million tonnes per year of LNG each from Sakhalin Energy Investment Company until 2028, the companies said in a joint statement.

Gazprom is a 50-percent-plus-one-share shareholder in Sakhalin Energy and Shell holds 27.5 percent.

The companies also agreed a new pipeline supply agreement under which Shell will receive 1 mtpa of gas from Russia to Europe.

As part of the transaction, Gazprom affiliates, under long-term assignment from Shell, will take capacity in Sempra’s Energia Costa Azul LNG import terminal in Baja California, Mexico, and pipeline capacity to transport gas to Southern California.

“This deal will enable Gazprom to begin shipment of LNG supplies from Sakhalin II to the United States, the world’s largest gas market, and other markets of the Pacific Basin, starting from this year,” said Gazprom chairman Alexey Miller.

Miller and Shell chief executive Jeroen Van der Veer also discussed further collaboration in LNG projects in Russia when they met Wednesday to sign the agreements, the statement said.

(Reporting by Edward McAllister; editing by Jim Marshall)

 

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