Exclusive: Gazprom building global alliance with expanded Shell

Fri Jun 19, 2015 3:04am EDT
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By Dmitry Zhdannikov and Denis Pinchuk

ST PETERSBURG, Russia (Reuters) - Gazprom is building a global strategic alliance with energy major Royal Dutch Shell that will include asset swaps and allow the Russian gas giant to penetrate new markets, its chief executive told Reuters.

Gazprom, the world's top gas producer, said on Thursday that Shell and its long-time gas buyers in Europe - Germany's E.ON and Austria's OMV - had agreed to build two new Nord Stream gas pipelines under the Baltic sea to Germany.

In a rare interview, chief executive Alexei Miller said the agreement with Shell also foresaw an expansion of the firms' joint $20 billion liquefied natural gas plant on the eastern island of Sakhalin as well as global upstream asset swaps.

"Documents of such significance are signed only once every five years or maybe even 10," Miller said on the sidelines of Russia's top forum for investors in Saint Petersburg.

The deal with Shell is a coup for Gazprom at a time when many Western companies are reducing their exposure to Russia because of Western sanctions over Moscow's actions in Ukraine.

Gazprom, which is under U.S. but not EU sanctions, is fighting for market share in Europe in the face of increasingly oversupplied gas markets, and is locked in a long-running dispute over payments to Europe with conflict-stricken Ukraine.

"Many of our traditional partners are positioning themselves as strong regional players... Shell is a global player. And as the global gas markets develop... we will be creating a global strategic partnership," said Miller.

Shell agreed to buy smaller rival BG for $70 billion plus debt earlier this year and Miller said the deal was adding extra potential to cooperation, such as upstream asset swaps between Gazprom and the Anglo-Dutch giant.   Continued...

Men speak near the pavilion of Gazprom company at the St. Petersburg International Economic Forum 2015 in St. Petersburg, Russia, June 18, 2015. REUTERS/Maxim Shemetov