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. Last Updated: 07/27/2016

Shell Denies Ditching Control in Sakhalin-2

Shell dismissed on Monday media reports that it had agreed to swap 7 percent of the Sakhalin-2 project in the Far East for the interests of Gazprom in the vast Shtokman Arctic gas field.

London's Observer newspaper quoted unnamed sources on Sunday as saying Shell was "prepared to consider a modest dilution" of its 55 percent stake in Sakhalin-2, possibly as much as 7 percent, which could cost it control of the project.

A Shell spokesman in Moscow said the firm was interested in gaining a holding in Shtokman, one of the world's biggest gas deposits, but was still in talks with various parties and had not come to any final agreement.

"We would not comment on any numbers that are being speculated about. Our policy is not to comment on speculation," he said.

Gas monopoly Gazprom has said it wants to find a partner by mid-2005 to exploit Shtokman, which contains 3.2 trillion cubic meters of gas and 31 million tons of condensate, and build a liquefied natural gas plant.

Gazprom is inexperienced at dealing with LNG, which repays massive investment by solving the problem of how to move the fuel around.

When supercooled and shipped at minus 162 Celsius, the gas can tap global demand.

Gazprom wants to market its first Shtokman LNG by 2011, with the plant processing 15 million tons per year in the first stage of development of the field, which lies about 600 kilometers off Russia's northeastern coastline.

Gazprom has also said it wants to be involved in Sakhalin-2, putting pressure on Shell and its partners, Mitsui and Mitsubishi of Japan, which have 25 percent and 20 percent respectively.

With the $10 billion project, Russia's biggest-ever foreign investment, Gaprom plans to load its first LNG cargo in November 2007, and has already sold the bulk of its annual 9.6 million tons of LNG to Pacific markets.