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Moscow Times: Shell Says Gazprom Talks Fine

Tuesday, June 13, 2006. Issue 3430. Page 7.

ROTTERDAM, Netherlands — Royal Dutch Shell sees no delay in its efforts to work out details of a complicated asset swap with Gazprom despite a budget overrun at one of the projects, Shell’s chief executive said Friday.

Gazprom said this week that the negotiations might last beyond 2006 after Shell reported a sharp increase of the estimated investment to develop the Sakhalin-2 project on Sakhalin Island, in the Far East. The project will be the world’s largest liquefied natural gas project.

The longer-term budget for the scheme is still subject to negotiation with the government and Shell’s announcement that costs would be double initial projections has complicated the process.

Gazprom wants 25 percent of the Shell-led project in return for 50 percent of its smaller Zapolyarnoye field in Siberia.

“We have taken all of 2006 to work out the details of the swap. I’m not concerned because the [Sakhalin] project is not finished anyway,” Shell CEO Jeroen van der Veer said on the sidelines of a Dutch business forum.

He played down concerns over the budget overrun. Shell now believes it will need to invest $20 billion to develop the Sakhalin project as opposed to an initial estimate of $10 billion.


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