Gazprom and Shell Reaffirm Strategic Cooperation

LNG carrier — LNG Carrier at Sakhalin LNG terminal

Alexey Miller, Chairman of the Gazprom Management Committee, and Ben van Beurden, Chief Executive Officer of Shell, discussed developments in their strategic cooperation, signed in 2015, this week at the sixth St. Petersburg International Gas Forum.

The parties discussed a wide range of issues related to the development of strategic partnership in the energy sector, paying particular attention to the construction project for the third production train of the LNG plant on Sakhalin Island (Sakhalin II project). It was noted that the preparation of design and FEED documentation is nearing completion.

The project infrastructure includes three offshore platforms, an onshore processing facility, 300 kilometers of offshore pipelines and 1,600 kilometers of onshore pipelines, an oil export terminal and an LNG plant. It is expected to ensure a reliable supply of energy continues from Russia to countries throughout Asia.

The Sakhalin II operator is Sakhalin Energy Investment Company (Gazprom – 50 percent plus one share, Shell – 27.5 percent minus one share, Mitsui – 12.5 percent, and Mitsubishi – 10 percent).

During the meeting Shell reaffirmed its position to facilitate the Nord Stream 2 project. Nord Stream 2 will be a twin pipeline system that can transport natural gas from the world's largest reserves in Northern Russia to supply homes and businesses across Europe.

Funded by leading international energy companies, the project builds on the success and experience of Nord Stream, which opened twin pipelines through the Baltic Sea in 2011 and 2012. The new pipelines will increase capacity along the Baltic Sea route from Russia to Germany and deliver enough energy to supply more than 26 million homes.

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.

Earlier this year, Maarten Wetselaar, Integrated Gas & New Energies Director at Shell said that Russia has demonstrated it is a reliable energy supplier. Looking at Europe, for example, Russia exported gas throughout the Cold War. In more than 17,500 days, there have only been 14 days when gas did not reach Europe. That’s almost half a century of energy security, he said.