Despite US sanctions, Shell partners up with Russian energy giant
Russian energy giant Gazprom is building up a global portfolio with a western oil major.
Gazprom and Royal Dutch Shell are teaming up on several energy projects that will benefit both. The two energy companies have agreed to build an expansion of the Nord Stream Pipeline, a major natural gas pipeline that travels beneath the Baltic Sea. The pipeline is a priority for Russia, which will allow it to expand its natural gas exports to Europe while also cutting out Ukraine from the mix.
Gazprom, Shell, along with E.ON and OMV 鈥� two gas importers in Western Europe 鈥撎齮o build the $11 billion expansion of Nord Stream.听()
Separately, Gazprom and Shell may expand a massive LNG project on the island of Sakhalin, a $20 billion project. Sakhalin is Russia鈥檚 only LNG project, and the two sides have agreed to add a third train. Gazprom鈥檚 CEO Alexei Miller told听that the two companies may even go further by agreeing to asset swaps. By expanding their cooperation, Miller says 鈥渨e will be creating a global strategic partnership鈥� with Shell.听()
The alliance with Shell helps Gazprom at a time when it has come under fire from the United States government. The standoff in Ukraine has put Russia鈥檚 energy sector in American crosshairs, but despite its profits taking a hit over the past year, Gazprom is finding ways to wriggle out beneath U.S. sanctions.
The partnership with Shell is proof of Gazprom鈥檚 success. Despite a lot of denunciations from Brussels over Russia鈥檚 involvement in Ukraine, Russia鈥檚 Gazprom is still doing business with one of Europe鈥檚 largest companies.听()
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Moreover, the growing relationship between the two energy giants could also be seen as a victory for Kremlin in its ongoing duel with Brussels over energy dependence. The European Union has sought to reduce its reliance on Russia for energy, but the expansion of Nord Stream will only swell Russian gas imports to Europe.
Gazprom鈥檚 Alexei Miller also went out of his way to say that the Nord Stream expansion would not be a replacement for Russia鈥檚 proposed Turkish Stream pipeline, which would connect Russian gas to Southern Europe.
By Charles Kennedy Of Oilprice.com
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