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Shell plans to discuss tax exemptions for Sakhalin-2 and Baltic LNG with Russian officials

March 07, 2017, 13:18 UTC+3 MOSCOW

Currently, Russia has only one LNG plant which operates as part of the Sakhalin-2 project

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MOSCOW, March 7. /TASS/. Shell intends to discuss with the Russian government the possibility of providing tax concessions for projects on expansion of the Sakhalin-2 and the Baltic LNG, CEO of Shell in Russia Olivier Lazar told reporters.

"We know, for example, that there are special tax conditions for Yamal LNG, so yes, we are going to discuss such opportunities for the Baltic LNG and the third stage of Sakhalin-2," he said.

Lazar did not elaborate on tax exemptions Shell would like to get for these projects.

Currently, Russia has only one LNG plant which operates as part of the Sakhalin-2 project.

Sakhalin Energy is the Sakhalin-2 operator. Sakhalin Energy’s shareholders are Gazprom with a 50% plus one share, along with Royal Dutch Shell (27.5%), Mitsui (12.5%), and Mitsubishi (10%). In 2015, the plant produced 10.8 mln tonnes of liquefied natural gas exceeding the project’s capacity by 1.2 mln tonnes.

On June 18, 2015, Gazprom and Shell signed a memorandum on the construction of the third technological line of the plant.

The Baltic LNG project is discussed in the context of the global partnership between Gazprom and Shell, which includes the Nord Stream-2 pipeline, the expansion of the LNG plant on the Sakhalin island and the exchange of assets. As a result of these operations the Russian monopoly expects to strengthen positions on the LNG market in the Asia-Pacific region.

The Baltic LNG project contemplates construction of a liquefied natural gas (LNG) plant with the capacity of 10 mln tonnes per year and expansion option up to 15 mln tonnes in Ust-Luga seaport on the Baltic Sea. The plant is scheduled to start operations in December 2021.

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