Royal Dutch/Shell and Russia's Gazprom, the world's largest gas producer, have joined forces for development of oil and gas projects.
A strategic alliance agreement signed in Moscow on Nov. 17 calls for Shell and Gazprom to create a 50/50 joint development company to cooperate in oil, gas liquids, and natural gas projects in Russia and internationally.
Shell said the joint firm is intended to produce about 500,000 b/d of oil and condensate. Its first project will be development and production of oil, condensate, and gas in part of Zapolyarnoye field in western Siberia.
Production of liquids and gas is expected to begin in 2003. The project is intended to lead to other major joint developments: in gas/oil transportation, including exports to Turkey; in gas/energy projects inside and outside Russia; and in development of Asian gas supply markets.
Under the alliance, Shell has committed to invest up to $1 billion in a convertible bond to be issued by Gazprom. This purchase will take place at the same time as a public offering of up to $1 billion worth of Gazprom shares to institutional investors, due early in 1998.
Jeroen van der Veer, group managing director of Shell, said, "This alliance marries Shell's technical, financial, and international strengths with Gazprom's vast experience of running a large-scale energy business.
"The alliance is fully consistent with our strategy to become a long-term player in the Russian oil and gas business. We also look forward to opportunities that will be raised for future cooperation in the international sphere."
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