June 20, 2006

Gazprom Invites Shell to Nadym

Russia’s gas monopoly, Gazprom, intends to set up a venture with Shell to process gas into a synthetic diesel fuel. The venture will build a works of 12-bcm annual capacity in Yamal-Nenets Autonomous Region. This move will extend the life of the fields of low-pressure formations and offload the uniform gas transport system in Nadym-Pur-Tazovsky region.

Gazprom and Shell are willing to construct in Nadym Russia’s first works to produce synthetic diesel fuel. The annual capacity will be 12 bcm, said Alexander Ryazanov, deputy chairman at Gazprom’s management committee. Gazprom needs the works because it is necessary to process the gas at place of production due to the lower formation pressure at Nadym-Pur-Tazovsky field.

Representatives of Gazprom declined to elaborate about the provisions of setting up the venture or the dates of the works’ construction.

Gazprom produces 80 percent of the gas in Nadym-Pur-Tazovsky Region, but 80 percent of the region’s fields suffer production decline. The new works will increase the yield, offload pipelines and reduce technological risks. Unlike the liquefied gas, synthetic diesel fuel could be delivered by ordinary tankers at low cost.