Reuters: Russian politicians emphasise Shell’s rights

Tue Sep 26, 2006

MOSCOW, Sept 26 (Reuters) – The speaker of Russia’s upper house of parliament and the governor of Sakhalin island on Tuesday emphasised the economic rights of the Shell-led (RDSa.L: Quote, Profile, Research) Sakhalin-2 project, which has been under fire from Moscow.

Their comments offered encouragement to the oil and gas project after it came under attack from other Russian officials for doubling its costs to $20 billion and the Natural Resources Ministry ordered a major environmental investigation.

The upper house speaker, Sergei Mironov, an ardent supporter of President Vladimir Putin, ordered the chamber’s natural resources committee to report back on Sakhalin-2 and get to the bottom of what was happening.

“We are primarily interested in the legal aspects of this issue and the ecological consequences. Protecting the interests of foreign investors is also of no small interest to us,” he was quoted as saying by Interfax news agency.

A Kremlin source told Reuters on Monday there was no plan to strip the project of its licence to operate on Sakhalin, the island north of Japan where the world’s biggest liquefied natural gas (LNG) project is now 80 percent complete.

Japanese giants Mitsubishi Corp (8058.T: Quote, NEWS, Research) and Mitsui & Co (8031.T: Quote, NEWS, Research) are the other major investors in Sakhalin-2 after Royal Dutch Shell, holding 45 percent between them.

The governor of Sakhalin region Ivan Malakhov told a news conference it was of key importance to protect the rights of production sharing agreements (PSA) that govern Sakhalin-2 and the neighbouring Sakhalin-1, operated by Exxon Mobil (XOM.N: Quote, Profile, Research).

“Reputation is more important than money,” Interfax quoted Malakhov as saying. “The Sakhalin projects are very significant, they show the system of interaction of Russian business, the authorities, foreign business and foreign governments.

“In these projects we have shown that Russia can cooperate and keep promises that were signed in the PSAs.”

Despite the environmental investigation and a threat to withdraw key ecological permits, both Sakhalin-1 and Sakhalin-2 say they are continuing to work as normal and have not yet received any notification of probes into them.

© Reuters 2006. All Rights Reserved.

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