Royal Dutch Shell chief executive Jeroen van der Veer
Photo: AP
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Gazprom Will Take Control of Sakhalin 2
The Anglo-Dutch Shell concern will turn over the controlling share in Sakhalin 2, the largest oil and gas project on the Russian continental shelf, to Gazprom. Kommersant has learned that 30 percent of the stock in the operating company, Sakhalin Energy Shell, Shell will give up 30 percent of its share, and Gazprom will obtain another 20 percent from other shareholders. Analysts say that the company gave in to pressure from Russian authorities.
Principle was reached on Friday at a meeting between Shell CEO Jeroen van der Veer and Gazprom head Alexey Miller. The Gazprom press service reports that “Mr. van der Veer made a number of proposals about Sakhalin 2 to Gazprom and they are being analyzed at the moment.” Shell stated only that a meeting yesterday with Minister of Industry and Energy Viktor Khristenko was “very constructive and positive.” No details of the agreement are being made public officially, although a Kommersant source close to Sakhalin Energy stated that Shell offered Gazprom 30 percent of its 55-percent share, and another 20 percent would come from the other co-owners, Mitsui & Co. (which now has a 25-percent share) and Mitsubishi (20 percent). Another source confirmed that the lineup of owners would not change, only their shares would.
Mitsui and Mitsubishi began talks with Gazprom on the sale of smaller shares in the project. Mitsubishi spokesmen said yesterday that they were unaware of the Friday meeting at Gazprom and that they do not intend to withdraw from the project. It was not possible to reach Mitsui yesterday for comment.
The transaction may be concluded in the first quarter of 2007. However, the deal proposed earlier, an exchange of a 25-percent share in Sakhalin 2 for 50 percent of the Zapolyarnoe gas field, is no longer being consider, according to a source close to Gazprom. Instead, Gazprom will pay cash. Analysts at MDM Bank estimate the value of 50 percent of Sakhalin Energy at $9 billion. At Gazprom, they are refusing to discuss the deal until the state makes the final decision. Deputy chief of the Gazprom information policy department Sergey Kupriyanov stated that “the decision will be made taking into account the problems that exist with the Sakhalin 2 project, including ecological problems.”
Under the Sakhalin 2 project, the Piltun-Astokh and Lunskoe deposits are being developed on a product sharing basis. Those deposits have recoverable reserves of 150 million tons of oil and 500 billion cubic meters of natural gas. Liquefied natural gas from the project is to begin appearing in the summer of next year and go to the United States, Mexico, Korea and Japan.
On Friday, a meeting of the supervisory council that manages the project is to take place to discuss the budget for the second stage of the project. Sakhalin Energy asked Russian authorities to increase the budget for that stage of the project from $12 billion to $20 billion. This summer, Russian officials began to criticize the financial aspects of the project and the Ministry of Natural Resources accused Sakhalin Energy of violations of ecological laws.
www.commersant.com
All the Article in Russian as of Dec. 12, 2006
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