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Gazprom and Shell committed to broader cooperation in LNG sector

June 16, 2016, 17:30

A working meeting between Alexey Miller, Chairman of the Gazprom Management Committee, and Ben van Beurden, Chief Executive Officer of Shell, took place today at the St. Petersburg International Economic Forum 2016.

The parties discussed the progress of and prospects for strategic cooperation in the LNG sector, paying particular attention to the construction project for the third production train of the LNG plant on Sakhalin Island (Sakhalin II project). Design and FEED documentation are currently being prepared for the new production train.

An emphasis was placed on the issues related to the ongoing Nord Stream 2 project.

Also today, Alexey Miller and Ben van Beurden signed a Memorandum of Understanding on the Baltic LNG project as a follow-up to the Agreement of Strategic Cooperation. The document reflects the parties' commitment to enhancing collaboration in the LNG sector. The companies will explore the possibilities and prospects for building an LNG plant with an annual capacity of 10 million tons in the port of Ust-Luga, Leningrad Region.

“We continue to expand our successful cooperation with Shell. An LNG plant oriented toward Asia-Pacific is efficiently operating on Sakhalin Island in eastern Russia. We are working to enhance its capacity.

We will now explore the possibilities for joining our efforts in the promising Baltic LNG project in western Russia. The new project will greatly diversify Gazprom's sales markets and strengthen our LNG portfolio,” said Alexey Miller.

“Shell and Gazprom are convinced that LNG and natural gas in general have great prospects. Over the past year, we made great efforts to advance our strategic cooperation. Today, Shell's primary focus in Russia is the expansion of the Sakhalin II project and the establishment of a world-class LNG center in Russia's Far East. At the same time, we continue to consider new avenues for collaboration in the energy sector,” said Ben van Beurden.

Background

Shell is a British-Dutch oil and gas company focused on hydrocarbon production, processing and marketing in over 90 countries worldwide.

An LNG plant was brought into operation as part of the Sakhalin II project. It is the only LNG plant in Russia. The Sakhalin II operator is Sakhalin Energy Investment Company Ltd. (Gazprom – 50 per cent plus one share, Shell – 27.5 per cent minus one share, Mitsui – 12.5 per cent, and Mitsubishi – 10 per cent). In 2015, Gazprom and Shell signed a Memorandum to construct the third production train of the LNG plant, as well as an Agreement of Strategic Cooperation providing for the expansion of the companies' joint project portfolio.

In 2015, Gazprom, BASF/Wintershall, ENGIE, OMV, Shell, and Uniper inked the Shareholders Agreement to construct the Nord Stream 2 gas pipeline system with the annual capacity of 55 billion cubic meters from Russia to Germany across the Baltic Sea.

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