The Guardian: Shell gives Gazprom 25% stake in Sakhalin project: "We welcome Gazprom as a great Russian partner in the Sakhalin-2 project and are confident Gazprom will make significant contributions towards maximising the long-term value of the project," said Shell's chief executive, Jeroen van der Veer.”: Friday 8 July 2005
Richard Wray
Friday July 8, 2005
The energy group Shell signed a deal yesterday with its Russian rival Gazprom to swap lucrative onshore and offshore gas assets in western Siberia.
Under the deal, which is to be finalised next year, Gazprom is obtaining just over a quarter of Sakhalin-2, the world's largest liquefied natural gas project, while Shell will receive a 50% stake in an other field, Zapolyarnoye Neocomian.
Sakhalin-2, off the east coast of Russia and north of Japan, is estimated by analysts to be one of Shell's most valuable assets as it lies on the doorstep of some of Asia's fastest-growing economies.
But production has yet to start and the project, which includes the construction of pipelines and terminals on Sakhalin Island, has come in for fierce criticism from environmental campaigners.
Just last month the European Bank for Reconstruction and Development refused to sign off a loan to help fund the $12bn (£6.8bn) oil and gas project until environmental concerns are resolved.
Earlier this year there were reports that the installation of the Sakhalin pipeline - the world's most expensive - was interfering with the island's fishing industry. Shell had already been forced to alter the route of the pipeline to help ensure the survival of the rare western grey whale.
The Anglo-Dutch group owns 55% of Sakhalin-2, with Japan's Mitsui owning a quarter and Mitsubishi the remaining 20%.
Zapolyarnoye in western Siberia, meanwhile, produces about 100bn cubic metres of gas a year.
The difference between the value of the two operations will be met with cash and shares and possibly the swapping of other assets. The full terms of the deal, which has been months in the arranging, will be finalised next year.
"We welcome Gazprom as a great Russian partner in the Sakhalin-2 project and are confident Gazprom will make significant contributions towards maximising the long-term value of the project," said Shell's chief executive, Jeroen van der Veer.
Gazprom's chief executive, Alexey Miller, added: "The document signed today opens the way for Gazprom to become in the nearest future a large shareholder of a fast-growing project for hydrocarbons development, LNG production and sale to strategic markets in north America and the Asia-Pacific region."
http://www.guardian.co.uk/business/story/0,,1523717,00.html
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