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    Gazprom Neft, Shell Firm up Plans on Gydan


Gazprom Neft wants to finalise the joint venture by the end of this year.

by: Joseph Murphy

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Gazprom Neft, Shell Firm up Plans on Gydan

Russia's Gazprom Neft and Shell have agreed to establish a 50:50 joint venture to develop two oil and gas licence blocks on the Gydan Peninsula in the Russia Arctic, Gazprom Neft said on July 21.

The Leskinsky and Pukhutsyayakhsky blocks are situated in the northeast of the Gydan peninsula, far removed from any oil and gas infrastructure. Subsoil licensing agency Rosnedra's subsoil database shows that the nearest known field to the blocks is Novatek's undeveloped Ladertoyskoye deposit, over 80 km away.

Leskinsky covers an area of over 3,000 km2, and is estimated by Gazprom Neft to hold potentially more than 100mn mt of oil equivalent. Pukhutsyayakhsky spans over a 800-km2 adjacent area and holds around 35mn mt of oil equivalent. Gazprom Neft has collected 2D seismic surveys at the sites and wants to start drilling at Leskinsky this year.

Gazprom Neft aims to close the joint venture deal by the end of 2020, pending corporate and regulatory approvals. A memorandum on the project was signed last year, under which Shell was only to take a 25% stake in the venture, instead of 50%, with 25% going instead to Spain's Repsol and Gazprom Neft retaining the remaining 50%.

"Exploration of the Gydan blocks is among Gazprom Neft's strategic objectives, so changes in the market conditions have not affected our plans," Gazprom Neft deputy CEO Vadim Yakovlev commented. "In the event of geological success, a new large hydrocarbon province will appear on the peninsula."

Shell's country chair Cederic Cremers noted that Russia remained a strategic focus for the major, despite difficult market conditions. The company is Gazprom Neft's main foreign investment partner, with their main joint venture being Salym Petroleum Development, which is exploiting mature oilfields in the Khanty-Mansiysk region of Western Siberia. Gazprom Neft has invited Shell to join several new projects, but has had difficulty sealing any deals.

Gazprom Neft's main focus in the Arctic is oil, but the company also produces significant volumes of associated gas in the region. It mooted plans in early 2019 to build its own LNG export terminal at the Novoportovskoye field, before deciding to construct a pipeline connecting the deposit with the national grid.