Russia to team up with Shell for Sakhalin-3,4 projects

Russia has expressed its willingness to partner with Royal Dutch Shell, Europe's largest oil and gas producer for the development of Sakhalin-3 and 4 oil and gas projects in Russia's far-east Sakhalin island.

Russian prime minister Vladimir Putin said in a meeting with Shell's chief executive Jeroen van der Veer in Novo-Ogaryovo near Moscow on Saturday. ''We are prepared to pursue cooperation further with your company having in mind Sakhalin-3 and Sakhalin-4.''

''These require offshore production in difficult deep sea areas where your experience will be very valuable,'' Putin added.

Sakhalin, the Russian island on the north-west Pacific and located at around 10,000km east of Moscow is endowed with rich oil and gas resources estimated at 14 billion barrels of oil and 96 trillion cubic feet of natural gas that are being developed under production-sharing agreement contracts involving international oil companies.

Earlier in March, the $22 billion Sakhalin-2 project was commissioned, in which Russia's energy behemoth Gazprom holds 50 per cent plus one share and Shell holding 27.5 per cent. The other two Japanese shareholders Mitsui and Mitsubishi have a stake of 12.5 per cent and 10 per cent respectively.

Shell, which initially held majority stake of 55 per cent in the project had to offload 50 per cent of its stake to Gazprom for $7.5 billion relinquishing control, when in 2007 the federal regulators threatened to close the project on environmental grounds.