Report: Shell still interested in Yuzhno-Kirinskoye field, CEO says

Shell is still interested in taking part in the development of the Gazprom-operated Yuzhno-Kirinskoye field located in the Sea of Okhotsk, in the Russian Far East.

The field is intended to feed the extension of the Sakhalin-2 project in which Shell has a 27.5%, however Shell’s involvement in Yuzhno-Kirinskoye is seen as complicated one, as the field has been under U.S. sanctions.

The U.S. Treasury on September 12, 2014, imposed sanctions that prohibit the exportation of goods, services, or technology in support of exploration or production for Russian deepwater, Arctic offshore, or shale projects that have the potential to produce oil – but not gas – to five Russian energy companies – Gazprom, Gazprom Neft, Lukoil, Surgutneftegas, and Rosneft.

The Yuzhno Kirinskoye offshore field is a gas and condensate field, intended to feed the Sakhalin-2 project extension.

However, in August 2015, the field was added to the U.S. sanctions list, as it, apparently also contains substantial reserves of oil in addition to reserves of gas.

Shell CEO Ben van Beurden told the Russian newspaper Vedomosti in an interview published on Monday, that the company is in talks with Gazprom over the Sakhalin-2 project.

He said various scenarios are being contemplated, including the buying of gas from the Exxon-run Sakhalin-1 project to supply the Sakhalin-2 project extension. However, he also said that gas from Yuzhno Kirinskoye was needed as well.

He said Shell was working on understanding whether the field contained oil or gas, but said Shell believed in contained gas rather than deepwater oil.
Van Beurden said that when all the parameters of the project are defined, the company would ‘definitely want to participate in it’.

Offshore Energy Today Staff

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