Gazprom, Shell Signal Continuing Partnership on Sakhalin 2 LNG Project

Russian gas giant Gazprom and its partner, Anglo-Dutch energy major Royal Dutch Shell, have signed a memorandum to construct the third production train of the Sakhalin II LNG plant, as well as an agreement of strategic cooperation, the companies said in a press release.

At a meeting in Moscow, the two companies’ executives, Alexey Miller and Ben van Berden, discussed cooperation issues, with special attention paid to the implementation and development prospects of the Sakhalin II project, Russia’s first LNG plant.

The two CEOs noted its contribution to the successful integration of Russian and international technological expertise and the creation in Russia of a sector for the production of liquefied natural gas.

Gazprom and Shell are jointly engaged in the Sakhalin II project, which includes Russia’s first LNG plant. The project operator of Sakhalin II is Sakhalin Energy (Gazprom – 50 percent plus one share, Shell – 27.5 percent minus one share, Mitsui – 12.5 percent, and Mitsubishi – 10 percent).

The signing of the document signals the continuing partnership between Gazprom and Shell and comes only weeks after the Anglo-Dutch giant decided to exit the Leningrad region-based Baltic liquefied natural gas (LNG) project led by Gazprom, citing differences over the project’s development design.

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 in the project, while Shell’s participation was not mentioned.

Media reports have suggested that the sudden introduction of RusGasDobycha, a company connected to U.S.-sanctioned Russian billionaire Arkady Rotenberg, was one of the reasons for Shell’s departure.