Shell has reportedly decided to pull out of a liquefied natural gas (LNG) project planned to be developed under a joint venture led by Gazprom on the Russian Baltic coast.
Although the reason for the decision remains unclear, a Reuters report suggested that it could be due to pressure from US sanctions.
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Russia has been under sanctions imposed by Western nations since 2014 in the aftermath of the Ukraine crisis.
Shell’s exit from the project could result in limited access to its technology for Gazprom. The Russian company would also lose out on funding support for the project from the Anglo-Dutch firm.
The move comes after the company stated earlier that it was studying the potential impact of Gazprom’s plans for Baltic LNG and gas processing plant integration.
Shell Russia chairman Cederic Cremers was quoted by the news agency as saying: “Following Gazprom’s announcement on 29 March regarding the final development concept of Baltic LNG, we have decided to stop our involvement in this project.
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By GlobalData“We have a number of other ongoing projects with Gazprom, including as part of the strategic alliance established between the two companies in 2015, which are not impacted by this decision.”
In June 2017, Gazprom reached a heads of agreement to set up a joint venture with Shell for the Baltic LNG project. The companies had also signed another agreement to conduct feasibility studies for the project.
The proposed LNG plant in the Leningrad Region will involve the construction of a plant near the seaport of Ust-Luga with an estimated annual capacity of ten million tonnes.
Shell also holds interest in the Sakhalin-2 plant led by Gazprom on the Russian Pacific island of Sakhalin. This project is involved in producing LNG with a design capacity of 9.6 million tonnes per year.
The company had developed the double mixed refrigerant technology used for production at the Sakhalin Energy LNG plant.
In February, the firm said it had formed a 50/50 joint venture with Gazprom that would leverage Shell’s LNG expertise to develop Russia’s own supercooling gas technology.
