Background

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

Gazprom and Shell are jointly engaged in the Sakhalin II project, which includes Russia's only active LNG plant. 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 the Memorandum to construct the third production train of the LNG plant, as well as the Agreement of Strategic Cooperation providing for the expansion of the companies' joint project portfolio, including a potential asset swap. In 2016, the LNG plant produced upward of 10.9 million tons of LNG, exceeding the design capacity by over 1.3 million tons.

In June 2016, Gazprom and Shell signed the Memorandum of Understanding on the Baltic LNG project. The document reflects the parties' intention to explore the prospects for cooperation within the project.

The Baltic LNG project envisages the construction of the LNG plant with an annual capacity of 10 million tons in the port of Ust-Luga, Leningrad Region.