Gazprom & Shell in Asset Swap

Alexey Miller, Gazprom's Management Committee Chairman and Jeroen van der Veer, Royal Dutch/Shell's CEO have sealed a Memorandum of understanding to swap assets within the Zapolyarnoye Neocomian field and Sakhalin-II projects.

Strategically crucial for both parties, the Memorandum outlines the highlights of the deal that will provide Gazprom and Shell with 25 percent plus one share in the Sakhalin-II project and a 50 percent cut in the Zapolyarnoye Neocomian field, respectively, with the difference in value to be identified by the parties and offset in cash or by other assets to be agreed upon additionally.

The final round of preparations for the swap will be overseen by a Steering Committee,to be on a par comprised of Gazprom and Royal Dutch/Shell's representatives, and joint working groups. The Memorandum stipulates the asset audit being performed to have all the preparations for the deal completed in 2006.

"Implementing its strategy, Gazprom becomes a prominent player in the LNG sector and gains access to new markets. The Memorandum signed today gives Gazprom the possibility of shortlyobtaining substantial ownership interest in a dynamically developing hydrocarbon extraction and LNG production & marketing to North America and Asia Pacific project," Alexey Miller was quoted as saying after the signing ceremony.

"We welcome Gazprom in the Sakhalin-IIproject as a high-class partner and are positive that Gazprom will make a large contribution into the strategic development of the project. By jointly developing the Neocomian deposits of the Zapolyarnoye field, we'll reinforce our standing in Western Siberia where we're successfully engaged in the Salym fields operation. The Memorandum will foster stronger ties between Shell and Gazprom as well as will set the stage for deeper cooperation within integrated gas projects both in Russia and on a global scale," underscored Jeroen van der Veer.

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