Gazprom, Shell ink Arctic cooperation deal

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Russia’s export monopoly Gazprom and the Anglo-Dutch energy giant Royal Dutch Shell have signed a tentative deal to develop hydrocarbons in the Russian Arctic, Russian and Dutch media reported.

The deal was signed on Monday (8 April) in Amsterdam by Gazprom chief executive Alexei Miller and Jorma Ollila, chairman of Royal Dutch Shell. Dutch Prime Minister Mark Rutte and visiting Russian President Vladimir Putin were also present.

The deal is a framework agreement for cooperation in the Arctic and does not refer to any specific hydrocarbon deposits, Russian media reported.

Under existing rules, only Russian companies with more than 50% state ownership and no less than five years’ experience working in marine exploration are allowed to develop the Russian continental shelf, the website RIA Novosti said.

Only Rosneft and Gazprom meet these requirements and can involve other companies in joint ventures.

Royal Dutch Shell also signed a memorandum with Gazprom Neft, Gazprom’s oil arm, on cooperation in exploring and producing shale oil in Russia.

Shale oil hydrocarbons are located in the Bazhenov, Abalak and Frolovskaya rock formations of western Siberia. The deposits lie at a depth of more than 2 km and are spread over more than one million square km, according to data on the Gazprom Neft website.

The Barents Nova website reported that the agreement underlines a principle of mutual access to resources, meaning Gazprom can enter international hydrocarbon projects of Shell. It is likely Gazprom is willing to take its 33.3% share in the Shell project in South Africa, the website says.

The companies have shown their willingness to go for shale oil exploration in Khanty-Mansiysk (Western Siberia), according to a press statement by Gazprom. Both partners will have a 59% stake in the venture.

The resource-rich Arctic is becoming increasingly contentious as climate change makes the region more navigable. 

In the aftermath of the BP oil slick in the Gulf of Mexico, the European Commission convened safety talks on deep-sea oil drilling with several oil companies, including Shell and BP.

In Europe, over 90% of oil and over 60% of gas production comes from offshore operations, mostly in the North Sea and Norwegian Sea. 

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