Page 5 - FSUOGM Week 03 2020

FSUOGM COMMENTARY FSUOGM
Gazprom Neft seeks to
entice Shell with new
upstream opportunities
Gazprom Neft and Shell both stand to gain from expanding their partnership
RUSSIA
WHAT:
Shell and Gazprom Neft want to expand their co-operation in Western Siberia
WHY:
Shell is attracted by Russia’s low production costs, while Gazprom Neft wants to tap the major’s technical and financial clout to develop challenging projects.
WHAT NEXT:
The pair are taking a cautious approach to new partnerships, however, because of the risk of new US sanctions.
RUSSIA’S Gazprom and Anglo-Dutch major Royal Dutch Shell have a long history together. The pair’s biggest joint investment is the Sakha- lin-1 project in the Far East, which annually ships around 11mn tonnes of LNG and around 80,000 barrels per day (bpd) of oil to markets in Asia.
While Shell withdrew last year from plans to help Gazprom build a second LNG terminal on the Baltic Sea, its appetite for investing in Rus- sian energy is as strong as ever. It is currently looking to partner up with Gazprom’s oil arm Gazprom Neft at a number of new projects in Western Siberia, to benefit from more low- cost production. For its part, the Russian firm is eager to expand co-operation with Shell for its superior technical capability and financial resources.
Meretoyakhaneftegaz
The two companies agreed last year to form a joint venture Meretoyakhaneftegaz to develop a cluster of oilfields in Western Siberia’s Khanty-Mansiysk region. The fields in ques- tion – Meretoyakhinskoye, Tazovskoye and
North-Samburgskoye along with the West-Yu- bileisky block – have combined resources of 1.1bn tonnes (8bn barrels), according to Gaz- prom Neft.
The pair have been discussing a partnership at Tazovskoye – the largest of the fields – for sev- eral years. Finalising Shell’s entry into the pro- ject has taken longer than anticipated because of delays in regulatory approvals. But Shell hopes the deal will be cleared by the Russian govern- ment’s commission on foreign investment by the end of the first quarter, its director for Russia, Cedric Kremers, told Vedomosti on January 18.
Salym
Shell and Gazprom Neft also want to expand the operations of their existing Siberian joint venture, Salym Petroleum Development (SPD). Gazprom Neft said on January 17 it had agreed to transfer its subsoil licence for the Salymsky-2 block to SPD, which already produces oil from the bordering West-Salymskoye, Verkhnesalym- skoye and Vadelypskoye fields.
“By transferring the Salymsky-2 block to the SPD asset base and achieving synergy with SPD’s
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