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Shell and Sovcomflot sign shipping co-operation agreements

Including Arctic shipping for future Russian LNG projects

Novo-Ogarevo, today, Open Joint Stock Company ‘Sovcomflot’ and Shell International Trading & Shipping Company Limited (Shell) signed a General Cooperation Agreement. The official signing ceremony was held within the framework of the meeting of Russian Federation Prime Minister, Mr Vladimir Putin, with outgoing Chief Executive Royal Dutch Shell plc, Mr Jeroen van der Veer and his successor from 1st July, Mr Peter Voser.

The documents were signed by Mr Sergey Frank, CEO of the Sovcomflot Group of Companies, and Mr Jan Kopernicki, Shell’s Vice President for Shipping.

The General Cooperation Agreement covers cooperation between the two companies in potential liquefied natural gas (LNG) shipping projects in Russia, including on the Arctic offshore. The Agreement provides for broadening of cooperation in future Sakhalin II project development, development of joint shipping solutions for natural gas fields on Yamal Peninsula, further improvement of LNG shipping technologies, including in difficult ice conditions, and development of floating storage and regasification units for gasification in remote regions of Russia.

According to Sergey Frank, Sovcomflot CEO, “The signed agreement allows to combine Shell’s profound experience in the production and the transportation of liquefied natural gas with Sovcomflot’s knowledge and technical potential in delivering cargos by sea in harsh ice conditions of the Arctic and Far-Eastern seas. This long-term international project is aimed at working out highly effective and ecologically safe transportation and logistical solutions for Russia’s future oil and gas projects implemented in the offshore fields of the Arctic”. 

Speaking at the event, Mr Kopernicki said, “Shell and Sovcomflot have for some time worked together on LNG seafarer training and through the development of the Sakhalin II project. The signing of these agreements builds on this and allows us to share our respective skills in LNG and Arctic shipping to support future Russian LNG projects. 

Alongside General Cooperation Agreement, the companies signed time-charter agreements for Sovcomflot’s Aframax type oil tankers to ship Shell’s crude from North West Europe and the Mediterranean.


Shell Trading is the principal trading and shipping business within the Shell Group.  It is a network of Shell companies that has a presence in every major energy market in the world. Every day, this network is responsible for the buying and selling of approximately 13 million barrels of oil equivalent.

  • Principal activities are the trading and shipping of a global portfolio of crude oil, refined products, natural gas, electrical power and chemical feedstocks. Five years ago, Shell Trading also established an environmental products trading business that is now operational in 15 markets.
  • Shell is a leader in LNG shipping – one of the most experienced and reliable players in the market.
  • Shell transfers LNG shipping expertise to partners around the world, including those in Brunei, Nigeria, Qatar and Australia
  • Shell’s expertise includes feasibility studies, benchmarking, port and terminal advice, technical consultancy, fleet operations and vessel procurement.
  • Through our technical leadership we have been involved in the conceptual design, tender, detailed design, construction and/or reactivation of almost 60 LNG carriers.
  • Our performance in LNG shipping is first class. We have been delivering LNG cargoes safely for over 45 years.
  • The safety performance of our fleet is consistently in the industry’s top quartile.
  • Our managed LNG carriers have been awarded Green Passports for environmental sustainability by Lloyd’s Register.

Sovkomflot Group is a major Russian infrastructural company with a fleet of 136 vessels with the aggregate deadweight of 9,6 million tonnes. The company's current shipbuilding programme includes 24 vessels with the aggregate deadweight of 2,1 million tonnes:

  • Fleet average age - 6 years (with the global average of 12).
  • Sovkomflot is №1 in the world in the Aframaks segment, № 2 in the segment of product tankers;
  • Sovkomflot has the largest global ice class fleet and is №1 operator in the segment of Arctic shuttle tankers and ice class LNG tankers
  • Apart from shipping of hydrocarbons, Sovkomflot provides services for crude transhipment via floating storage units, and develops efficient logistical solutions for transportation of energy resources.
  • Shell's share in Sovkomflot shipping portfolio makes up to 5% and gradually increasing with the development of oil and gas projects both in Russia and internationally.

Sakhalin II is one of the largest integrated projects in the world developing two oil and gas fields (Piltun-Astokhskoye and Lunskoye) offshore north-east Sakhalin for production and export of crude oil and liquefied natural gas (LNG). The Project includes first LNG plant in Russia. The Sakhalin II Project introduced the Russian Federation to a range of innovative technologies, from LNG production to offshore development of hydrocarbon fields.  The project, which brought together Russian and International expertise to overcome the formidable challenges, provides a potential model for similar collaboration in unlocking much needed reserves in Arctic regions.

The oil tanker chartering deals cover the time charter of a Sovcomflot crude oil tanker for Shell International Trading & Shipping Company Limited and a Contract of Affreightment (COA) which is an arrangement by which Shell International Trading & Shipping Company Limited have access to a number of Sovcomflot’s fleet of modern double-hulled crude oil tankers operating to load and deliver crude oil cargoes in North West Europe.

Cautionary note
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this announcement refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as “associated companies” or “associates” and companies in which Shell has joint control are referred to as “jointly controlled entities”. In this announcement, associates and jointly controlled entities are also referred to as “equity-accounted investments”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect (for example, through our 34% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This announcement contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘probably’’, ‘‘project’’, ‘‘will’’, ‘‘seek’’, ‘‘target’’, ‘‘risks’’, ‘‘goals’’, ‘‘should’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Group’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory effects arising from recategorisation of reserves; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell’s 20-F for the year ended December 31, 2008 (available at www.shell.com/investor and www.sec.gov). These factors also should be considered by the reader.  Each forward-looking statement speaks only as of the date of this announcement, 27 June 2009. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement.

The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions.  We use certain terms in this announcement that SEC's guidelines strictly prohibit us from including in filings with the SEC.  U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.