Financial Times: Shell opens door to links with Gazprom: “Jeroen van der Veer, chief executive of Royal Dutch/ Shell, has opened the door to future deals with Gazprom, the Russian gas group, by welcoming its rapid expansion into the oil sector.” (ShellNews.net) 7 Dec 04
By James Boxell
Published: December 7 2004
Jeroen van der Veer, chief executive of Royal Dutch/ Shell, has opened the door to future deals with Gazprom, the Russian gas group, by welcoming its rapid expansion into the oil sector.
His comments are likely to cause controversy at a time when Gazprom is putting together plans to bid for the main production unit of Yukos, the oil group that is being dismantled by the Russian state.
Western oil groups such as Shell, ChevronTexaco and ExxonMobil of the US and Italy's Eni are understood to be interested in the Yukos assets but were reluctant to become involved in the initial round of bidding for fear of huge tax liabilities and the threat of litigation from Yukos and its shareholders.
However, the companies are keeping their options open on whether they could acquire parts of the Yukos assets following any Gazprom purchase.
In an interview with Bloomberg Television in Paris, Mr Van der Veer, said: "It helps us to have clarity on what Gazprom is. It is the crown jewel that's very important for the future of Russia."
Mr Van der Veer also confirmed that Shell was in discussions with Gazprom over its participation in Shell's $10bn-plus liquefied natural gas project on Sakhalin Island in Russia's far east, which include the possibility of an asset swap. The project has been hit by cost over- runs, which some estimates put as high as $2bn (£1.04bn).
He also said the company would complete the latest recalculation of its proved oil reserves by the end of the year. It was forced in October to admit that it would cut its proved reserves again, on top of the 23 per cent reduction earlier this year.
Yuganskneftegas, the main production unit of Yukos, is expected to be sold on December 19 at a price well below what the market believes it is worth to help cover $24bn of tax claims on the parent company.
Western companies are eager to buy equity stakes in Russian companies as their traditional production assets begin to mature and at a time when it is difficult to gain access to Middle Eastern oil-producing countries.
Yukos is Russia's biggest oil producer.
Gazprom is already in the middle of a merger with Rosneft, the Russian state oil company.
Separately yesterday, Mr Van der Veer said Shell would double its sales of liquefied natural gas, one of the key industry growth areas, by the end of the decade.