Gazprom, Shell Building New Gas Pipeline to Germany

July 2015, Vol.242, No. 7

Energy giants Gazprom and Shell, along with E.ON and OMV, signed a memorandum Thursday to construct a third technical line for a LNG plant on Sakhalin Island on Russia’s Pacific Coast.

Under the agreement, the companies would build a new route under the Baltic Sea from Russia with a capacity of 55 billion cubic meters a year. No timeline on the project was announced.

The Sakhalin-2 field is operated by Sakhalin Energy, which is primarily owned by Gazprom (50%) and Shell (27.5%). The location includes the first LNG plant in Russia. According to Gazprom, 65% of Sakhalin LNG is shipped to Japan.

In May, Gazprom stated it planned to maintain the level of gas extraction at the Sakhalin-2 field at 16-17 billion cubic meters in 2015.

The new pipeline will help “contribute to enhancement of safety and reliability of gas supplies” to European markets,” according to Gazprom CEO Alexei Miller.

The project would double the capacity of the existing Nord Stream pipeline that links Russia to Germany.

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