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Putin invites role for Shell

RUSSIAN Prime Minister Vladimir Putin last Saturday said Royal Dutch Shell Plc could participate in development of two hydrocarbon fields on the Sakhalin island.

The invitation followed a tug-of-war between the Kremlin and the energy company over one of the world's largest natural gas fields.

"I think cooperation with Shell on Sakhalin 3 and Sakhalin 4 (projects) is possible," Putin said in televised remarks after a meeting with Shell's CEO Jeroen van der Veer. "Shell's experience will be important."

In 2007, Shell was forced to cede its controlling stake in Sakhalin 2 development to state-controlled Gazprom for US$7.5 billion. Shell kept 25.7 percent of the stake and helped launch a US$22-billion liquefied natural gas plant, Russia's first-ever, in February.

Putin praised the progress made in developing the Sakhalin 2 project.

"The work goes on successfully and ahead of schedule," Putin said. "We will have a chance to diversify our cooperation."

Also last Saturday, Shell signed a deal with the state-owned shipping company OAO Sovkomflot to build tankers for transporting LNG produced at the Sakhalin 2 plant.

Earlier this month, Gazprom's CEO said the company is considering inviting Shell to participate in LNG projects on the Yamal peninsula in west Siberia.

Russia's interest in LNG has grown sharply in recent years as a way of expanding its customer base beyond the pipeline network that links it to Europe. Customers in Japan, South Korea and the United States have already bought all the gas to be produced at the Sakhalin 2 LNG plant over the next 20 years.


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