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    Shell Exits Siberian JV


Gazprom Neft is eager to expand cooperation with its closest foreign partner, but has had difficulty closing investment deals.

by: NGW

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Shell Exits Siberian JV

Shell has withdrawn from joint plans with Russia's Gazprom Neft to develop a group of oil and gas fields in Western Siberia, Gazprom Neft said in a statement on April 13.

The pair filed a request with Russian regulators in October for Shell to take a 50% stake in Gazprom Neft's Meretoyakhaneftegaz subsidiary. It  holds rights to the Meretoyakhinskoye field in Russia's Yamalo-Nenets region. But Gazprom Neft also agreed to transfer control of the Tazovskoye and North-Samburgskoye fields, and the two West-Yubileisky blocks to the company before completing the deal with Shell.

"Shell has advised Gazprom Neft that, due to the challenging external environment, it will not pursue the completion of a deal to create a joint venture (JV) through Meretoyakhaneftegaz," the Russian firm said in a statement. Gazprom Neft aims to continue developing the assets on its own, with the goal of launching commercial production at Tazovskoye by the end of 2020.

Meretoyakhinskoye and North-Samburgskoye contain only oil, but Tazovskoye – the largest of the assets – holds 186bn m³ of gas in addition to 438mn mt of crude. Gazprom Neft is targeting a peak production rate of 2.1mn mt/yr of oil by the early 2020s. It is in talks with its parent company Gazprom on constructing a 50-km gas pipeline to connect Tazovskoye with the Zapolyarnoye field, Russia’s top gas producer.

 Shell is Gazprom Neft's closest foreign partner. The pair's main partnership is the Salym Petroleum Development (SPD) JV, which has been exploiting three major fields in Western Siberia for almost 25 years. Gazprom Neft's parent Gazprom is also the biggest shareholder at the Sakhalin-2 LNG terminal in the Russian Far East, originally a Shell development.

Gazprom Neft is eager to broaden its relationship with Shell, having offered the Anglo-Dutch major stakes in several new upstream projects. But Shell has been reluctant to commit, partly because of market conditions and partly because of the risk of new US sanctions.

Gazprom Neft has invited Shell to explore deposits on the Arctic peninsula of Gydan, develop a pair of oilfields off Sakhalin Island and target oil at the giant Yamburgskoye gas field in northern Russia, but no agreements on these projects have been reached. However, the pair did close a deal in late March to add more acreage to the area that SPD is developing.