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25

Gazprom Buys Sakhalin-2 from Shell

Russia's gas monopoly Gazprom signed a $7.45 billion deal

Russia's gas monopoly Gazprom signed a $7.45 billion deal on Thursday to buy half of the Sakhalin-2 project from Shell.

Shell will continue to contribute to management and act as technical adviser on Sakhalin-2, which will honour its existing contracts to sell liquefied natural gas to Japan, South Korea and the United States according to the agreed schedule, with the first shipment due in the summer of 2008.

But the deal, which follows months of pressure from Russian officials who threatened to delay the project, raises questions about Shell's reserves, since the British-Dutch oil major has one of the worst reserve replacement records among its peers.

Shell confirmed its reserves would be affected by the sale. "The change will affect our reserve position and probably also our future production outlook," Shell spokesman Andre Romeijn told.