Russian President Vladimir Putin met the head of the Royal Dutch Shell, Ben Van Buerden, this week to discuss liquefied natural gas (LNG) projects, the Kremlin's press service said.
As reported by bne IntelliNews, earlier this year Shell pulled out of the Baltic LNG project with Russian natural gas giant Gazprom.
"Shell is one of the largest foreign investors in [the] Russian economy, with over $15bn [in] investment. The company [has been] working in Russia since 1892, when it first sold gasoline in [the] Russian empire. We have a lot to talk about," Putin's press secretary Dmitri Peskov told Interfax. "To be serious, we have many projects related to LNG," he added.
Since 1994 Shell (27.5% minus one share), together with Mitsui and Mitsubishi (12.5% and 10% respectively) together with Gazprom (50% plus one share) has been producing LNG at the Sakhalin Energy project.
LNG is Gazprom's weak spot, as the company operates the only LNG plant in Sakhalin and is facing delays in the planned Baltic LNG project after the pull-out of Shell. In the meantime its domestic rival Novatek has almost caught up with the state oil and gas majors in terms of capitalisation after adopting and successfully carrying out an ambitious LNG strategy.
Vedomosti notes that Shell pulled out from Baltic LNG after Gazprom re-qualified the project as an integrated gas-chemical complex. Analysts surveyed by Vedomosti on the daily commented that sanctions were seriously limiting the ability of Shell to expand its presence in Russia.
Another important unresolved issue for Shell in Russia is the third stage of Sakhalin-2. The daily notes that for several years Sakalin Energy has been trying unsuccessfully to negotiate buying natural gas from Sakhalin-1 operated by US ExxonMobil, which has also pulled out of most of its large-scale Russian projects.
However, after the minutes of the meeting with Van Buerden were published on the Kremlin website, the only commitment from Shell that came from the CEO was the one to open an additional 260 fuel filling stations in five years, in addition to the 300 already operated by Shell in Russia.