Differences Over Concept Led Shell to Break Baltic LNG Partnership: Chairman

Anglo-Dutch energy giant Shell decided to withdraw from the Baltic LNG project because it does not agree with the change in its concept, the company’s chairman Cederic Cremers, Shell Russia Chairman, told TASS news agency.

“The reason is that we don’t believe in an integrated concept. We were discussing the initial concept which was to separate LNG project from the chemical plant. That was the concept that we believed would be properly technical and economically investable. So that is why we decided to exit because we don’t have the same view on the integrated development,” he said, speaking on the sidelines of the forum of future leaders, organized by the World Petroleum Council.

Commenting on the possibility of technological participation in the new concept of the project, Cremers said: “We normally only use the technologies on projects that we are involved in, projects where we are also investing and where we are in involved in building. That is our normal practice.”

In 2015, Shell became the only partner of Russia’s state-run gas monopoly Gazprom in the Baltic LNG project. In late 2018, Gazprom and Shell inked a framework agreement on the technical concept of the Baltic LNG.

Shell initially estimated the plant’s capacity at 10 million tons of liquefied natural gas per year, with a possible subsequent increase in capacity to 13 million tons.

In March of 2019, Gazprom changed the concept of the project, which now provides for the full integration of the Baltic LNG and the gas processing plant. Russian company RusGasDobycha was announced as the only partner of Gazprom in the project, while Shell’s participation was not mentioned.

After Shell’s exit from the project, Gazprom reported that they were considering technologies of Shell and Germany’s Linde AG for the LNG integrated complex project in Ust-Luga.