Russia's Gazprom gets foothold into US natural gas market

09 April 2009

Russian state-owned Gazprom, the world's largest natural gas supplier, made its first breakthrough in the US market by signing multipart LNG and pipeline gas supplies agreements with Royal Dutch Shell.

The agreements, signed in Moscow by Alexei Miller, chairman, Gazprom's management committee, and Jeroen Van der Veer, CEO, Royal Dutch Shell, will allow companies will deliver 1 million tons of liquefied natural gas per annum until 2028.

Through this 20-year agreement Shell will be able to strengthen the diversification and flexibility of its supply portfolio and its marketing position in the European gas market with Russian natural gas while Gazprom gets access to Shell's Sempra Energia Costa Azul LNG import terminal in Baja California, Mexico, and pipeline capacity to transport gas to Southern California.

With this deal, Gazprom has entered the US, considered to be the most lucrative gas market in the world as well as other markets of the Pacific Basin and will begin shipping LNG supplies this year from Sakhalin II project.

Alexey Miller said, ''Gazprom has consistently implemented its strategy of reinforcing the company's standing on the LNG market and this deal will enable Gazprom to begin shipment of LNG supplies from Sakhalin II to the US, the world's largest gas market, and other markets of the Pacific Basin, starting from this year.''

While Van der Veer said, ''This is another important milestone in cooperation between Gazprom and Shell and we look forward to expanding further our relationship with Gazprom in a variety of activities related to natural gas and LNG developments both in Russia and internationally.''