Oil major Shell has agreed in principle to cede control of the €16.5 billion Sakhalin-2 project to Russian gas monopoly Gazprom, industry sources say.
An accord whereby Shell would keep a blocking stake of at least a quarter in the world's largest liquefied natural gas project was reached on Friday at talks between Shell CEO Jeroen van der Veer and Gazprom's head Alexei Miller.
The understanding comes after months of pressure from Russia's Natural Resources Ministry and its environmental regulator, which have accused Shell of ecological violations in project work on the remote Far Eastern island of Sakhalin.
Industry analysts suspect the official campaign was designed to secure better terms for Russia, which has no equity stake in Sakhalin-2 under a production-sharing agreement struck in the early 1990s.
Work on the Sakhalin-2 project, which will supply a processing facility with a capacity of 9.6 million tonnes per year, is mostly complete but threats of licence withdrawals, fines and litigation are disrupting development work.
A doubling of estimated costs at Sakhalin derailed an earlier deal under which Shell would have swapped a one-quarter stake in Sakhalin for an interest in Gazprom's onshore Zapolyarnoye field.
Sources say Gazprom will now swap oilfield assets and possibly make a cash payment for a controlling stake of over 50 per cent in Sakhalin-2.
Anglo-Dutch Shell now owns 55 per cent and is the project's operator.