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Shell, Gazprom May Expand Sakhalin LNG by 2015, Governor Says

By Ilya Arkhipov and Stephen Bierman – Dec 29, 2010 5:18 PM GMT

OAO Gazprom, Russia’s gas export monopoly, and Royal Dutch Shell Plc may build a third train to produce liquefied natural gas at their $22 billion Sakhalin-2 venture by 2015, the regional governor said.

The two companies may alternatively build a new LNG plant, Alexander Khoroshavin, the governor of the Sakhalin region, told Russian Prime Minister Vladimir Putin in a meeting today, according to Khoroshavin’s press service. A third train at the Sakhalin-2 project may boost capacity by 5 million metric tons, he said.

Gazprom spokesman Sergei Kupriyanov said he had no information about such talks to increase Sakhalin capacity. Shell spokesman Maxim Shoob declined to comment.

The two companies will discuss assets swaps next year, possibly giving Shell a stake in Gazprom’s nearby Sakhalin-3 project, Khoroshavin said. Gazprom said Nov. 30 that it had agreed with Shell to expand work in Russia. Sakhalin-3 project is currently in the exploration phase.

Gazprom agreed to take control of the Sakhalin-2 venture, which includes Japan’s Mitsubishi Corp. and Mitsui & Co., in 2006. The LNG plant, which begun last year, has a capacity of 9.6 million tons a year. LNG is gas cooled to a liquid for transportation by ship.

To contact the reporter on this story: Stephen Bierman in Moscow [email protected].

To contact the editor responsible for this story: Will Kennedy at [email protected].

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