On 18 June 2015, Royal Dutch Shell and Gazprom signed agreements aimed at deepening their strategic partnership, with a focus on expanding the Sakhalin II liquefied natural gas (LNG) project. The deal, signed by Shell CEO Ben van Beurden and Gazprom Chairman Alexey Miller, included plans for a third LNG production train at Sakhalin II, fed by additional gas from the Sakhalin III project. However, just seven weeks later, on 7 August 2015, the U.S. government imposed export restrictions targeting the Yuzhno-Kirinskoye field, a key resource for Sakhalin III, creating a significant obstacle to the expansion plans.
The agreements signed in June 2015 went beyond maintaining the existing LNG project, contemplating broader cooperation across the gas industry, including potential asset exchanges. The memorandum specifically identified Sakhalin III as the source of additional gas needed for the third LNG train at Sakhalin II. This dependency highlighted the complexity of the projects, as Sakhalin II and Sakhalin III had different ownership structures and commercial arrangements.
The U.S. restrictions on the Yuzhno-Kirinskoye field, also known as South Kirinsky, directly impacted the feasibility of the expansion plans. The field was a crucial part of Gazprom’s Sakhalin III development program, which included technically challenging offshore operations in the Sea of Okhotsk. The U.S. action underscored the tension between Shell and Gazprom’s commercial ambitions and the geopolitical realities of the time.
The primary documents, including Gazprom’s corporate announcements and the U.S. Federal Register, provide a clear timeline of the events. While the agreements in June 2015 outlined a strategic vision, the August 2015 restrictions revealed the fragility of those plans in the face of international sanctions and export controls.