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Gazprom and Shell show solidarity over Sakhalin II project

01st October 2014

Gazprom and Shell have shown their long-term commitment to the joint Sakhalin II project to produce liquefied natural gas (LNG) in Russia’s Far East with a meeting of heads today between the two oil and gas giants - this comes as many Western firms are scaling back their Russia operations due to sanctions imposed over Moscow's handling of the Ukraine crisis

Gazprom and Shell show solidarity over Sakhalin II project
The parties praised the joint efforts of both companies and emphasized a high potential of building up the LNG production as part of the said project

The Gazprom headquarters in Moscow hosted the working meeting today between Gazprom's management committee chairman, Alexey Miller, and Shell's chief executive officer, Ben van Beurden.

Many Western firms are scaling down their Russia operations as sanction come into effect due to the crisis in Ukraine, but Shell and Gazprom appear confident about their long-term partnership at the massive Sakhalin II project.

Gazprom has said in a statement that the participants addressed the issues of their current and future bilateral cooperation, especially in regard to the liquefied natural gas (LNG) production at the Sakhalin II project. The parties praised the joint efforts of both companies and emphasized a high potential of building up the LNG production as part of the said project.

In February 2014 Gazprom and Shell signed the memorandum-roadmap to prepare FEED documents for the third LNG production train within the Sakhalin II project.

Sakhalin Energy is the Sakhalin II project operator with ownership spread among Gazprom (50 per cent plus one share), Shell (27.5 per cent less one share), Mitsui & Co. (12.5 per cent) and Mitsubishi Corporation (10 per cent).

As part of Sakhalin II, Russia's first LNG plant was commissioned in 2009 and consumers abroad started receiving LNG from Russia. In 2010 the plant reached its full capacity of 9.6 million tons per year. A total of 10.8 million tons of LNG and 5.4 million tons of oil were produced within the Sakhalin II project in 2013.

In 2013 Gazprom and Shell signed the memorandum outlining the principles of cooperation within hydrocarbons exploration and development in Russia's Arctic shelf and a part of deepwater shelf abroad.

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