Russian gas monopoly Gazprom and Royal Dutch Shell are thinking about building a gas-to-liquids plant in Western Siberia in a project potentially worth $7-8 billion, Gazprom said on Monday.
"We are considering building a 12 bcm (billion cubic metre) gas-to-liquids plant in Nadym together with Shell," Gazprom's deputy CEO Alexander Ryazanov told a conference. Shell confirmed it had entered talks with Gazprom, but it stressed that discussions were at an early stage and declined to put a potential value on the project.
"We are in discussion with Gazprom over a preliminary feasibility study for a gas-to-liquids (GTL) project in Russia," a Shell spokesman said. The estimate Ryazanov gave for investment in the project, Russia's first GTL plant, would put it on a par with Shell's proposed investment in the world's biggest GTL plant in Qatar. Analysts have speculated the cost of the Pearl project in Qatar could hit $8 billion, up from a 2003 Shell estimate of $5 billion.
Shell has said a final investment decision on Pearl, a joint venture with Qatar Petroleum, is due this year. GTL technology processes natural gas into clean oil products such as low-sulphur diesel, which is increasingly in demand to meet tightening restrictions.
Gazprom said a move into GTL would make sense, as the cost of pumping gas from some fields was rising as output from those fields declines. The first commercial-scale GTL project was launched this month in Qatar, in a joint venture between Qatar Petroleum and South Africa's Sasol Ltd.