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. Last Updated: 07/27/2016

Shell Suggests Developing Yamal Field With Gazprom

British-Dutch oil firm Shell has proposed developing oil and gas reserves in the far northern Yamal Peninsula with Gazprom.

The project, put forward with other Dutch companies, involves the production and transportation of oil, natural gas, gas condensate and liquefied natural gas on the Yamal Peninsula and surrounding Arctic Ocean, Kirill Fyodorov, spokesman for the Industry and Energy Ministry, said by telephone Thursday.

Gazprom estimates the Yamal Peninsula's reserves at 10.4 trillion cubic meters of gas and has called the region "one of the most promising oil and gas regions in western Siberia." Shell agreed to cede control of its $22 billion Sakhalin-2 offshore oil and gas project to Gazprom last year after regulatory agencies threatened to shut it down over purported environmental violations.

"They have offered their services and their experience on the Yamal Peninsula and the shelf of the Karskoye Sea," Fyodorov said. "We're talking about building man-made islands."

Gazprom would be involved in the Yamal project "because Gazprom has the licenses for these fields," he said.

Shell is "very interested" in developing Yamal, Dutch Prime Minister Jan Peter Balkenende said in an interview in Moscow on Wednesday.

Shell chief executive Jeroen van der Veer presented a plan to develop the region with other Dutch companies to President Vladimir Putin at a Kremlin meeting this week, Balkenende said.

"There is a very important project; that is the Yamal project," Balkenende said when asked whether Shell was looking at new oil and gas production areas in Russia.

No one at Shell was available to comment. Olga Gorodilina, a Shell spokeswoman, said Wednesday that discussions between Van der Veer and Putin were "confidential."