September 20th, 2006:

By CHIP CUMMINS
September 20, 2006 12:04 p.m.

LONDON – Royal Dutch Shell PLC warned Wednesday that any substantial delay caused by Russia canceling construction approval for its Sakhalin Island oil and natural-gas project would result in delays of liquefied natural-gas shipments to Japan and Korea that are scheduled to begin as early as 2008.

The warning ratchets up the rhetoric between Anglo-Dutch oil giant Shell and Moscow, which have squared off over Sakhalin II, a massive energy project in Russia’s Far East. Shell majority owns and operates the project. read more

By ELIZABETH JAMES

RUSSIA tightened the screw on Royal Dutch Shell and its partners yesterday. 

The state-owned energy giant Gazprom revealed that crucial talks over a stake in an £11 billion gas and oil project had stalled.

The move came as authorities in Europe, London and Tokyo voiced deep concerns over the Kremlin’s decision to revoke environmental approval for the Sakhalin 2 project.

They also expressed fears for other foreign investments in the country. Gazprom was in talks with Shell, which runs Sakhalin 2 in partnership with Japanese giants Mitsubishi and Mitshui, over a possible asset swap which would have seen the Russians with a 25% chunk. read more

Dmitry Zhdannikov and Elif Kaban
Reuters
Wednesday, September 20, 2006

MOSCOW – Russia stepped up the pressure on Royal Dutch Shell PLC and its Japanese partners yesterday over a US$20-billion oil and gas development in the Far East, sparking protests from Tokyo, Brussels and London.

In the latest blow to Sakhalin-2, one of the world’s biggest energy projects, Russian gas monopoly Gazprom revealed that asset swap talks with operator Shell had stalled for months due to Shell’s cost overrun at Sakhalin. read more

16:19 | 20/ 09/ 2006

TOKYO, September 20 (RIA Novosti) – Russia’s envoy to Japan sought to defuse Thursday a potential conflict with Tokyo over the fate of the Sakhalin II energy project, saying Moscow had no intention of closing it down over claims of environmental damage.

Japan’s Chief Cabinet Secretary Shinzo Abe, who is poised to replace Junichiro Koizumi as prime minister, said Tuesday a decision made by the Russian Natural Resources Ministry to annul its own approval of an ecological study of the project could harm bilateral relations. read more

IRKUTSK – Sakhalin II need not be suspended while waiting for a new assessment of the feasibility study to be conducted, a deputy economics minister said Wednesday.

The Ministry of Natural Resources annulled Monday its approval of a 2003 environmental study on Sakhalin II after prosecutors protested the original endorsement.

Russia’s environmental watchdog, the Federal Service for the Oversight of Natural Resources, yesterday said work on the project should be suspended until specific engineering proposals are in place on each of the pipeline’s sections. read more

By Upstream staff

A federal judge in Alaska has blocked a new government rule aimed at shielding bowhead whales from noise associated with ConocoPhillips’ seismic exploration in remote Arctic waters.

US District Judge Ralph Beistline said that ConocoPhillips had raised enough questions about whether the new rule is needed or would be effective and that it would pose enough hardship to the company to warrant that its implementation be delayed.

The rule issued by the National Marine Fisheries Service requires that any seismic work emitting noise over 120 decibels be stopped when four or more mother-calf pairs of bowhead whales are present, reported Reuters. read more

  By Upstream staff

(Call for clarity: from the Netherlands’ Foreign Minister Ben Bot)

Dutch Foreign Minister Ben Bot has demanded clarification from Russia over the Ministry of Natural Resources’ revocation of environmental permits for the $20 billion Shell-led Sakhalin 2 development.

“The way the Russian authorities have acted towards Shell is worrying and undermines confidence in Russia,” Forbes quoted Bot as telling Netherlands broadcaster NOS.

On Monday, a spokesman for the Ministry of Natural Resources said that “the prosecutor general on Saturday issued an order to cancel … the approval of the ecological assessment. We are required to fulfil this order”. read more

Commentary: Putin playing fast and furious on the corporate scene
By Sieve Goldstein. MarketWatch Last Update: 8:39 AM ET Sep 20, 2006

LONDON (MarketWatch) – If is no surprise by now that the Russian government is playing hardball to achieve its economic aims, though the speed at which Vladimir Putin will shift alliances is truly dizzying.

It was only a few months ago when Putin, peeved he wasn’t able to win U.S. backing for World Trade Organization membership, hinted that international partners for the key Shtokman liquefied-natural-gas project would be Norway’s Statoil and Norsk Hydro, rather than Chevron and ConocoPhillips. (A decision on that project hasn’t been made.) read more

By Greg Walters and Benoit Faucon           
Tuesday, September 19, 2006 

MOSCOW Sep 19, 2006 (AP)

Russian natural gas giant OAO Gazprom (GSPBEX.RS) has pressed Royal Dutch Shell PLC (RDSB.LN) to add equity or regasification capacity at Shell’s North American liquefied natural gas holdings to a contentious asset swap involving Shell’s Russian venture Sakhalin Energy Ltd., people familiar with the situation told Dow Jones Newswires.

Gazprom’s push for capacity or equity in one or more of Shell’s U.S. regasification terminals comes as Russian regulators announced Tuesday they had canceled a key environmental permit for Sakhalin Energy, forcing the Shell-led joint venture to stop work on the project’s massive second phase. read more

By Ikuko Kao

TOKYO, Sept 20 (Reuters) – Royal Dutch Shell’s $20 billion oil and gas project in Russia’s far east will progress more swiftly if Gazprom joins, Russia’s ambassador to Japan said on Wednesday, underscoring Moscow’s desire for a bigger role.

Shell-led (RDSa.L: Quote, Profile, Research) Sakhalin-2 is due to begin shipping large volumes of natural gas to Japan in two years. But the project faces uncertainty after Russia revoked environmental approval on Monday in a move seen by many as the Kremlin’s latest effort to wrest more control over energy resources. read more

By Upstream staff

Alexander Losyukov, Russia’s ambassador to Japan, said today that Shell’s $20 billion Sakhalin 2 development, which hit new environmental hurdles this week, could start operating early – if Gazprom joined it.

Seeking to quell fears over late-stage objections to the project, which is due to supply large amount of natural gas to Japan from 2008, Losyukov said Sakhalin 2 would move ahead and that he expected Shell to complete talks over selling a stake to state gas giant Gazprom by the end of the year. read more

By John Donovan

On Monday morning, 18 September, visitors to this website may have noticed three new items.  A photograph of President Putin of Russia on our homepage header, posing the question “Putin… Shell’s new boss?” plus two cartoon style features, both focused on Shell’s difficulties with Putin and the Sakhalin II project.

A guest on our busy “Live Chat” facility has raised questions about the timing of these innovations bearing in mind the related dramatic news which broke within a matter of hours.  We have all witnessed the actions by Russian authorities, described by UPI as a “virtual takeover of the Shell project” and in The Guardian newspaper, as the outbreak of “an economic cold war”. read more

By Shigeru Sato

Sept. 20 (Bloomberg) — Showa Shell Sekiyu K.K., the Japanese refining unit of Royal Dutch Shell Plc, bought a cargo of crude oil from Exxon Mobil Corp.’s $13 billion Sakhalin-1 project in Russia for the first time.

Showa Shell bought 700,000 barrels of the light, low-sulfur Sokol oil from Japan Petroleum Exploration Co., which has a stake in the project, a company official said, asking not to be identified in keeping with company policy, and declining to give the price. The shipment is expected to be loaded in November. read more

Created: 20.09.2006 10:51 MSK (GMT +3)

Russian Economy Minister German Gref said on Tuesday, Sept. 20, that the country may stop using production sharing agreements (PSA) for mineral deposits in the future but will honor the current contracts. Gref was talking in the wake of environmental suspension of Shell-led Sakhalin-2 oil and gas project in the Far East.

German Gref also said the government could not support all the spending proposals made by foreign companies that run Sakhalin-2 project. The project costs have already doubled to $20 billion, prompting unhappiness from the government. As MosNews has reported, on Monday evening Russia’s Natural Resources Ministry annulled its approval of environmental probe at the project, which was conducted in 2003. read more

10:49 | 20/ 09/ 2006 

IRKUTSK, September 20 (RIA Novosti) – Sakhalin II need not be suspended while waiting for a new assessment of the feasibility study to be conducted, a deputy economics minister said Wednesday.

The Ministry of Natural Resources annulled Monday its approval of a 2003 environmental study on Sakhalin II after prosecutors protested the original endorsement.

Russia’s environmental watchdog, the Federal Service for the Oversight of Natural Resources, yesterday said work on the project should be suspended until specific engineering proposals are in place on each of the pipeline’s sections. read more

By Torrey Clark

Sept. 20 (Bloomberg) — Royal Dutch Shell Plc’s Russian venture may be charged with destruction of forests, a criminal offence, as President Vladimir Putin extends government control of the nation’s oil and gas industry.

The construction of a pipeline by Shell’s Sakhalin Energy across Sakhalin Island caused at least 11 million rubles ($410,000) of damage to the forests, Oleg Mitvol, the deputy head of the Natural Resources Ministry’s environmental inspectorate, said at a press conference in Moscow yesterday. read more