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Gazprom and Shell sign two agreements on Baltic LNG

Gazprom and Shell also jointly participate in the Sakhalin-2 project

ST. PETERSBURG, June 3. /TASS/. Gazprom CEO Alexey Miller and the CEO of Royal Dutch Shell Ben van Berden have signed main terms of the joint venture agreement within the framework of the St. Petersburg International Economic Forum, the Russian gas holding said in a statement.

The document outlines the principles for the functioning of the joint venture, which will carry out design, financing, construction and operation of the LNG plant in the Leningrad region. Gazprom and Shell will continue to work on the Baltic LNG project on the basis of these principles.

The parties also concluded a framework agreement on joint feasibility studies on the Baltic LNG project.

"The signing of this document will allow the companies to start developing pre-project documentation for the project," the statement said.

Gazprom and Shell signed the memorandum of understanding on the Baltic LNG project in June 2016, also at the St. Petersburg International Economic Forum.

The Baltic LNG project contemplates construction of the LNG plant in the area of Ust-Luga port (Leningrad region) on the Baltic Sea with the capacity of 10 mln tonnes per year and the expansion option to 15 mln tonnes per year

Gazprom and Shell jointly participate in the Sakhalin-2 project. Currently, the only LNG production plant in Russia operates as part of that project.

The project’s operator is Sakhalin Energy Investment Company Ltd. (Gazprom holds 50% plus one share, Shell - 27.5% minus one share, Mitsui - 12.5%, Mitsubishi - 10%).

In 2015, Gazprom and Shell signed a memorandum on the construction of the third technological lines of the LNG plant, as well as a strategic partnership agreement, which envisages options for extension of portfolio of joint projects, including a possible swap of assets.

In 2016, the plant produced more than 10.9 mln tonnes of LNG, exceeding the design capacity by more than 1.3 mln tonnes.