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Interfax Information Services, B.V.: Gazprom and Shell Discuss Sakhalin-2 Project

Mar 2nd, 2006
by admin.

Shell and Gazprom have set up a joint management committee to discuss the inclusion of the Russian gas giant in the Sakhalin-2 project, Chris Finlayson, Shell's manager in Russia, told journalists on Tuesday.
He said that official negotiations between the shareholders in the project and Gazprom only began a month ago, and that a joint management committee was set up, which has already met twice and will meet again next week.
Finlayson said that at the moment the negotiations are progressing very successfully, but that a lot of technical and organization work remains to be done.
He said that Shell is working in close contact with other shareholders in the project – Mitsui and Mitsubishi – to make the deal with Gazprom as effective as possible.
He said that according to agreements reached, Gazprom will become a participant in the project and will have a stake of about 25%, and that this would be done by selling a stake to Gazprom, and that the shareholders should decide how exactly to do this. Finlayson said that the other side of the deal is to exchange a share in Sakhalin-2 for a stake in the Zapolyarnoye-Neocomian project, being developed by Gazprom.
He said that he does not think that this issue will be decided soon, but that he believes that it will be a very successful and profitable deal, both for Gazprom and for Shell. He said that by taking part in the project Gazprom will be in the very center of a project to build the first liquefied natural gas plant in Russia and will be a participant in the LNG market, and Shell will receive access to the gas market in Western Siberia. He said that Gazprom is a very important partner for Shell.
COMMENT FROM A SHELL INSIDER:
Putting aside the spin and hype in the article, a more consise interpretation would be: “After several weeks of negotiations, Shell and Gazprom fail to reach agreement, form committee to continue discussions.”

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