Shell Expands Russia Project with Support from Putin

Royal Dutch Shell PLC has won a promise of support from President Vladimir Putin for an oil and gas project it hopes to expand in Russia's Far East.

The Sakhalin-2 project on Sakhalin Island north of Japan is Russia's only producer of liquefied natural gas. The planned 50 percent expansion of the project from 10 million metric tons to as much as 15 million comes as both Shell and Russia seek to expand to Asian markets. For Shell, it's a financial decision, but for Russia, it's part of a push to find markets for the country's oil and gas outside of Europe.

The project is expected to pay out $4 billion to Russia this year, compared with $2.66 billion in 2013.

"We are very keen to grow our position in the Russian Federation," Shell's CEO, Ben van Beurden, told Putin. "We look forward with anticipation and confidence on a very long-term future here in Russia."

All of this comes as Russia faces Western ire and the threat of further economic sanctions over Ukraine and the annexation of Crimea. The Russian gas monopoly OAO Gazprom -- Shell's partner in the Sakhalin project -- is the country's largest company, and energy is the biggest part of the country's budget (Bloomberg/Fuel Fix, April 18).

Republished from EnergyWire with permission. EnergyWire covers the politics and business of unconventional energy. Click here for a free trial

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