Shell eyes major project on Russia's Yamal

MOSCOW, Nov 7 (Reuters) Royal Dutch Shell wants to expand its presence in Russia by entering ''a huge-scale long-term liquid gas and oil project'' with local companies on the Yamal peninsula, its chief executive said on Wednesday.

''It is not like building a house, it is like building a city. It will take a very long time. And of course we will work with Russian companies,'' Jeroen van der Veer told Reuters in Moscow.

Van der Veer spoke after talks on Tuesday between Russian President Vladimir Putin and a high-level Dutch business delegation led by Prime Minister Jan Peter Balkenende.

After the lengthy meeting, Putin and van der Veer both expressed their satisfaction with the progress of Shell's business in Russia.

Such public statements often indicate that the Kremlin is close to blessing a major business deal.

Shell has repeatedly said it was looking to expand its presence in Russia and gain a third large-scale project despite being forced last year to cede control in the billion Sakhalin-2 oil and gas project to Gazprom.

Shell retains a 25 percent share in Sakhalin-2 and also controls the mid-sized Salym oil production project in Siberia.

Gazprom, the state-controlled gas export monopoly, holds most of the gas reserves on Yamal. It has yet to start production and build pipelines to evacuate gas from the remote peninsula north of the Arctic Circle.

''Experience has taught us that if you are not involved ... from the start you can't get it any more and that's why we have set a first step,'' said van der Veer.

REUTERS BJR BD1600