Gazprom, Shell review LNG opportunities

Both companies are already working to advance Russia's only liquefied natural gas facility.
By Daniel J. Graeber Follow @dan_graeber Contact the Author   |  May 30, 2017 at 6:26 AM
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May 30 (UPI) -- Russian energy company Gazprom said it signed agreements with Royal Dutch Shell that could expand on bilateral deals related to liquefied natural gas.

Gazprom Chairman Alexei Miller hosted delegates from Shell at his Moscow office to discuss future collaboration on projects covered under strategic cooperation agreements from 2015.

Gazprom holds a 50 percent stake in the Sakhalin liquefied natural gas project on Russia's far eastern coast, while Shell controls a 27.5 percent stake. Japanese companies hold the remaining interest.

"In 2015, Gazprom and Shell signed the memorandum to construct the third production train of the LNG plant, as well as the agreement of strategic cooperation providing for the expansion of the companies' joint project portfolio, including a potential asset swap," Gazprom explained in a statement.

A train is a facility used to convert gas to the super-cooled liquid form.

Gazprom said last year that Sakhalin could help diversify its portfolio with LNG opportunities in Asia. Expanding Sakhalin, Russia's only LNG facility, was considered a "high priority" for a country that satisfies about 20 percent of the European energy demand.

Liquefied natural gas offers more flexibility in terms of deliverability when compared with conventional natural gas, which is bound to transnational pipelines. In February, Shell said in an annual review that LNG demand is on pace to grow at twice the rate of conventional gas, or between 4 percent and 5 percent per year through 2030.

Gazprom's outreach with Shell follows a five-year contract awarded last week to Scottish energy services company Wood Group for work tied to the Sakhalin facility. The contract builds on a 10-year relationship between Russian companies and Wood Group on the island.

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