Shell Quits Gazprom-Led Baltic LNG Project

Shell is to exit its partnership with Gazprom on the Baltic LNG project after the Russian company changed the concept, the chairman of Shell's Russian unit said April 10.

"Following Gazprom’s announcement on March 29 regarding the final development concept of Baltic LNG, we have decided to stop our involvement in this project," Shell's Russian chair Cedric Cremers said.

The Baltic LNG project involves construction of a gas liquefaction plant in Ust-Luga with a capacity of up to 13mn tons/yr. However, Gazprom announced in late March that it had changed the concept.

The Russian company now plans to merge it with its gas processing plant in north-western Russia. On top of the LNG output, it is now planned to process and ship 4mn tons/yr of ethane and 2.2mn tons/yr of “liquefied hydrocarbon gases,” Vedemosti reports. The first phase is expected to be launched in 2023. Gazprom estimates total costs at RUB700bn ($10.8bn).

Shell’s departure is unlikely to help Gazprom accelerate its adoption of LNG. Shell has been providing the technology for the projects on which the pair cooperates, mainly the Sakhalin LNG plant in the far-east.

“The decision will not affect other joint projects with Gazprom, implemented as part of a strategic partnership created by the two companies in 2015,” Cremers said. However, Shell will not provide its gas liquefaction technology to the Baltic LNG project.