Source AP ©

OAO Gazprom took control of the huge Sakhalin-2 oil-and-gas project

The Russian state gas monopoly OAO Gazprom formally took control of the huge Sakhalin-2 oil-and-gas project, after wresting a majority stake from Shell and its partners in a US$7.45 billion deal.

Company representatives put their signatures on the agreement that sees Royal Dutch Shell PLC, Mitsui & Co. and Mitsubishi Corp. halve their stakes in the development on the Pacific island of Sakhalin.

Gazprom receives a 50-percent-plus-one-share stake in the US$22 billion (EUR16.2 billion) liquefied natural gas project, which was the largest energy project in Russia controlled by foreign companies.

The deal was concluded in December, after months of mounting pressure from Russian regulators on the project. Environmental officials had accused Shell of damaging the island's fragile environment and had threatened to revoke key licenses.

"Gazprom's entry into Sakhalin-2 is a powerful impetus for implementation of this large-scale development in the area of energy export to Asia Pacific and North America," Gazprom's Deputy Chief Executive Alexander Medvedev said in a statement. "It will facilitate the company's strategy of phased entry into the global liquefied natural gas market."

Production of liquefied natural gas is expected to begin next year, at which time Medvedev told reporters Gazprom would appoint a new head of Sakhalin Energy, the operator of the project.

"We will have a balanced system of management where positions will be divided between representatives of Gazprom and other shareholders and the position of general director will be nominated by Gazprom," Medvedev said.

Foreign-controlled energy projects have come under increasing pressure from the Kremlin in recent months as it pursues a drive to secure majority state control in major oil and gas fields.