Royal Dutch Shell head office

Dutch oil and gas giant Shell is reportedly in negotiations to acquire a stake in the onshore Tazovskiy project in Russia from state-controlled oil producer Gazprom Neft.

The development was reported by Reuters, which cited three unnamed sources familiar with the matter.

Located in the northern Yamal region, the Tazovskiy project was first discovered in 1962 and has initial resources of 438 million tonnes of oil and 186 billion cubic metres of gas.

The project is expected to come online in 2021, with production set to be two million tonnes of oil.

“For Gazprom Neft, it’s a chance to raise quick money, while, for Shell, to get cheap reserves.”

If the talks are successful, it would represent a rare entry into Russia’s energy sector by a major Western oil company since the imposition of sanctions on the country in 2014.

The sanctions have been enforced due to Russia’s role in the Ukraine crisis as the country was accused of backing separatist rebels in eastern Ukraine.

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Before the sanctions were put in place, Western oil majors such as US firm ExxonMobil were looking to invest in new projects in Russia to make use of the country’s vast and relatively cheap energy resources.

However, since the implementation of the sanctions, several Western firms shelved their investment plans in new projects.

One of the sources told Reuters that Shell is keen to buy around 50% of the Tazovskiy project, with an aim to close the acquisition by the end of the year.

The news agency quoted the source as saying: “For Gazprom Neft, it’s a chance to raise quick money, while, for Shell, to get cheap reserves.”

After sanctions were imposed on Moscow, Shell suspended some of its oil and gas projects in the region.

The company can strike a deal with Gazprom Neft as the Russian oil producer is not on the US Treasury Department’s Specially Designated Nationals list.

Shell owns the Salym petroleum project in western Siberia in a joint venture with Gazprom Neft.