Gazprom and Royal Dutch Shell announce the signing of LNG and natural gas contracts

Alexey Miller, Chairman of OAO Gazprom’s Management committee, and Jeroen Van der Veer, Chief Executive Officer of Royal Dutch Shell, met today at Gazprom Headquarters in Moscow. During the meeting the parties announced the signing of agreements concerning LNG and pipeline gas supplies.

The agreements include the purchase of LNG by both Shell Eastern Trading LTD and Gazprom Global LNG from Sakhalin Energy Investment Company. Deliveries to Gazprom and Shell begin in 2009 and will last until 2028, totaling 1 mtpa each to Gazprom and Shell at plateau. The agreements also include a new pipeline gas agreement for the delivery of an equivalent volume of gas to Shell in Europe. Through this 20-year agreement Shell will be able to strengthen the diversification and flexibility of its supply portfolio and its marketing position in the European gas market.

As part of the transaction, Gazprom affiliates, under long-term assignment from Shell, will take capacity in Sempra’s Energia Costa Azul LNG import terminal in Baja California, Mexico, and pipeline capacity to enable gas to be transported to Southern California.

Alexey Miller and Jeroen Van der Veer praised the signed documents and stated that these agreements open new business development opportunities for both companies.

Alexey Miller said: “Gazprom has consistently implemented its strategy of reinforcing the Company’s standing on the LNG market and this deal will enable Gazprom to begin shipment of LNG supplies from Sakhalin II to the United States, the world’s largest gas market, and other markets of the Pacific Basin, starting from this year.”

“This is another important milestone in cooperation between Gazprom and Shell, “ said Mr Van der Veer. “We look forward to expanding further our relationship with Gazprom in a variety of activities related to natural gas and LNG developments both in Russia and internationally.”

Alexey Miller and Jeroen Van der Veer also discussed opportunities for further expansion of bilateral cooperation in LNG projects in Russia.