Russian energy giant, state-owned Gazprom, has taken control of the Sakhalin-2 oil and gas field from Anglo-Dutch rival Shell for $7.5 billion for one share in excess of a 50-per cent stake.

The transaction reduces to half the stakes of Shell and its Japanese consortium partners Mitsui and Mitsubishi in the $22- billion project. Shell's stake in the project stands halved to 27.5 per cent and that of the Japanese firms to 12.5 and 10 per cent respectively.

According to a statement from Shell, the consortium, "will remain the operator of the Sakhalin II project. Gazprom will play a leading role as majority shareholder while Shell will continue to significantly contribute to SEIC management and remain as technical advisor."

The staement also says that the completion of th the project on schedule is the consortium's "key focus" to allowing LNG to be delivered to existing customers in Japan, Korea and the North American West Coast. All existing LNG sales contracts will remain in force and will be honoured, the statement added.

Shell has been facing accusations from the Russian authorities that have accused the oil giant of breaking environmental and criminal laws, which analysts says were designed to strengthen the government's position in renegotiating the development of the field. Shell has denied the charges.

After the deal was signed, President Putin said he was glad that the issue had been resolved.

Due to be finished in 2008, Sakhalin-2, with estimated resources of some 45 billion barrels oil equivalent is the largest integrated oil and gas project in the world and a production capacity of 80,000 barrels oil equivalent per day.

The next phase of the development, in which $12 billion had been invested by the end of Q3 2006, will take the project capacity to 340,000 barrels oil equivalent per day, including 9.6-million tones per year of LNG production. The project is 80-per cent complete.