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. Last Updated: 07/27/2016

Shell Reviews More LNG Units

LONDON -- Shell will build more liquefied natural gas processing units at its Sakhalin-2 project in Russia if it gains access to more reserves with Gazprom, its new state-run partner.

Shell and its two Japanese partners agreed in December to sell Gazprom half their stakes in the Sakhalin-2 venture, which includes the country's first LNG export terminal. Shell had anticipated years before the deal with Gazprom that it might build more LNG units, called trains, to create an export hub for Sakhalin-area projects.

"We have in the design of the present two-train LNG complex enough space to add additional trains,'' Shell CEO Jeroen van der Veer said Thursday. "There's only a point to add additional trains if you have secured long-term supply of additional resources. To have a Russian partner -- because not everything is opened up around Sakhalin island yet -- may help.''

Shell's proven reserves will drop by about 400 million barrels of oil equivalent when the equity transaction with Gazprom is concluded this year, which will give Gazprom majority control of the project. Van der Veer said Shell's agreement with Gazprom is to "look together for additional resources in the Sakhalin area."

The LNG site is now 95 percent complete and long-term gas sales for the second phase of the project have been completed.

The Hague-based Shell and Japanese partners Mitsui and Mitsubishi will own 27.5 percent, 12.5 percent and 10 percent, respectively, once the equity sale to Gazprom is complete.