Shell explains why it withdrew from Baltic LNG project with Gazprom
St.Petersburg. Shell decided to withdraw from the Baltic LNG project because it does not agree with the change in its concept, Cederic Cremers, Shell Russia Chairman, told TASS on the sidelines of the forum of future leaders of the World Petroleum Council.
"The reason is that we don’t believe into an integrated concept. We were discussing the initial concept which was to separate LNG project from the chemical plant. That was the concept that we believed would be properly technical and economically investable. So that is why we decided to exit because we don’t have the same view on the integrated development," he explained.
When commenting on the possibility of technological participation in the new concept of the project, Cremers noted: "We normally only use the technologies on projects that we are involved in, projects where we are also investing and where we are in involved in building. That is our normal practice," he said.
In 2015, Shell became the only partner of Gazprom in the Baltic LNG project. In late 2018, Gazprom and Shell inked a framework agreement on the technical concept of the Baltic LNG.
Shell initially estimated the plant’s capacity at 10 mln tonnes of liquefied natural gas per year, with a possible subsequent increase in capacity to 13 mln tonnes.
In March of 2019, Gazprom changed the concept of the project, which now provides for the full integration of the Baltic LNG and the gas processing plant. The RusGasDobycha company was announced as the only partner of Gazprom in the project, while Shell’s participation was not mentioned.
After Shell’s exit from the project, Gazprom reported that they were considering technologies of Shell and Germany’s Linde AG for the LNG integrated complex project in Ust-Luga, informs TASS.
The Baltic LNG is the plant to be located in the area of Ust-Luga seaport on the Baltic Sea. Countries of the Atlantic region, Middle East, South Asia and small-capacity LNG markets in Baltic and North Seas regions are viewed as target markets for LNG produced at the plant. The plant is expected to be commissioned in 2022-2023 but the timeframe can be reconsidered after preparation of the design package, Gazprom said earlier.