Royal Dutch Shell plc .com Rotating Header Image

Posts on ‘September 27th, 2006’

The Moscow Times: Oil Showdown on Sakhalin Island

Thursday, September 28, 2006. Issue 3507. Page 1.

By Miriam Elder
Staff Writer

YUZHNO-SAKHALINSK — Foreign oil majors and state officials squared off on Sakhalin Island on Wednesday, with Shell and ExxonMobil insisting that work on the island’s prized oil and gas fields was continuing as usual despite increasing state pressure on the multibillion-dollar projects.

President Vladimir Putin also weighed in on the debate, warning in televised remarks that the government would take appropriate measures against any oil firm breaching its license.

read more

International Herald Tribune: Putin warns oil concerns

Agence France-Presse, The Associated Press
Published: September 27, 2006

SOCHI, Russia President Vladimir Putin of Russia warned Wednesday that the authorities would take action against “unconscientious” oil and gas companies that failed to fulfill their license obligations.
 
Putin made his remarks at a meeting with Yury Trutnev, the natural resources minister, amid tensions between the state and Western energy investors, particularly over the Sakhalin-2 oil and gas project in the Russian Far East.
 
“I expect the ministry and the government as a whole to make such decisions, including as regards companies that work unconscientiously or do not fulfill license agreements,” Putin said.
 
Meanwhile, the Russian foreign minister said Wednesday that the environmental checks being conducted at the project would not necessarily lead to the revoking of the project’s license.
 
The minister, Sergey Lavrov, speaking at the first day of an international oil and gas forum on the island, intended his comments to reassure Western governments that have been rattled by a decision to pull a key environmental permit at the project, where liquefied natural gas supplies have already been contracted 20 years ahead.
 
“The checks that are being carried out by no means signify that the licenses for exploration as part of the Sakhalin-2 project will be revoked,” Lavrov said in remarks televised from the oil and gas forum on Sakhalin, an island in Eastern Russia. “The aim of the checks is solely to ensure that all sides abide by the terms of the agreement in good faith.”
 
Last week, the Natural Resources Ministry announced it would revoke the environmental permit at Sakhalin- 2, provoking an international outcry over fears that work could be halted at the $20 billion development.
 
On Tuesday, Trutnev said that the ministry would conduct a monthlong review of the project. If Sakhalin Energy, the consortium led by Shell that includes the Japanese firms Mitsui and Mitsubish, fails to present satisfactory proposals to overcome numerous environmental violations, work would be frozen, Trutnev said.
 
Observers interpreted the move as a means to pressure the company to secure better terms for the state gas monopoly Gazprom, which is seeking to join the project.
 
But Lavrov strongly denied those suggestions.
 
“Statements about some sort of a revision of production-sharing agreements and especially about a squeezing out of foreigners from the Russian fuel and energy sector are groundless,” he said.
 
Ian Craig, the Sakhalin Energy chief executive, expressed confidence Wednesday that the project would not be interrupted. The permit, he said, was “highly unlikely to be revoked.”
 
Sakhalin-2 is one of a handful of so- called production-sharing agreements that were struck in the early 1990s when Russia was desperate for foreign investment to help develop its reserves. The deals offered Western oil companies control in the projects as well as lucrative tax breaks.
 
But now that Russian finances have been transformed thanks to high energy prices and state control in the oil sector is rising, the government appears to be reconsidering the projects.

read more

Forbes: New Problem At Sakhalin

Chris Noon, 09.27.06, 4:20 PM ET

Russia on Wednesday threw a new roadblock in the way of the foreign companies trying to develop the Sakhalin-2 energy site in the eastern part of the country, charging Royal Dutch/Shell, Mitsui and Mitsubishi with violating worker safety rules.

A week ago, a suddenly ecologically minded Kremlin revoked environmental authorization for the $20 billion project.

“There have been quite a lot of violations of industrial safety rules … this worries our inspectors,” said Konstantin Pulikvosky, head of the environmental, engineering and nuclear monitoring agency Rostekhnadzor. The decision has, unsurprisingly, caused international protest. Yasuo Saito, Japan’s ambassador to Moscow, called the Russian government action “one-sided”, and lacking in “procedural transparency”.

read more

Delft University of Technology: TU Delft and Shell jointly invest in sustainable mobility

27 September 2006

From 10 October eight PhD candidates will start working in the joint Shell TU Delft research programme Sustainable Mobility. The research subjects vary from sustainable hydrogen production to traffic regulations models for reducing fine particle emissions. The programme is a four-year joint project, in which Shell will invest 3 million euro and TU Delft 1.5 million euro. Both organisations share the vision that universities and companies working together are the driving forces behind innovation.

read more

Voice of America: Russia Warns of Action Against Foreign Oil Investors who Violate Rules

 President Putin

Vladimir Putin (file photo)

By VOA News
27 September 2006

Russian President Vladimir Putin is warning that Russian authorities will take action against foreign oil companies that fail to meet environmental regulations and other licensing agreements.

Mr. Putin spoke Wednesday in Sochi, at a regional conference of energy ministers from Black Sea countries.

Last week, Moscow revoked environmental approval for the huge Sakhalin-2 project, run by Royal Dutch Shell on Russia’s Pacific coast.  However, Russia’s Natural Resources Ministry later gave Royal Shell and other investors another month to fix any environmental problems at Sakhalin before any action is taken.

read more

Itar-Tass: Sakhalin Energy Co charters two giant oil tankers

27.09.2006, 13.43 
 
YUZHNO-SAKHALINSK, September 27 (Itar-Tass) – The Sakhalin Energy Company (operator of the Sakhalin-2 project) has chartered on Wednesday two giant tankers of the Primorye Shipping Company to ship the petroleum obtained on the Sakhalin shelf. A corresponding agreement was signed at the international “Sakhalin Oil and Gas–2006” conference, which is currently under way here.

The “Ostrov Sakhalin” and “Gubernator Farkhutdinov” tankers with a deadweight of 100,000 tons each will be used to ship petroleum from the Prigorodnoye settlement area on the southern part of Sakhalin.

read more

Transcript of conversation today between President Putin and his Natural Resources Minister, Yury Trutnev

Flag of Russian Federation

STATE FLAG
OF THE RUSSIAN FEDERATION

27 September 2006

EXTRACT: VLADIMIR PUTIN: This information is essential for taking decisions. I hope that the ministry and the government will take these decisions, including with regard to those who are not working honestly or not fulfilling the licence agreement conditions.

YURY TRUTNEV: This is precisely why we have created this system. Over the last 18 months we have cancelled user rights for 200 licensed sites and will continue this work with regard to companies that commit gross violations of the licence agreements. 

read more

Sydney Morning Herald: Russia’s reputation on line in oil row

Thursday September 28, 2006

RUSSIA’S threat to halt a $US22 billion ($29 billion) oil and gas project may damage the nation’s reputation among overseas investors, particularly because the process lacks transparency, a Japanese official said.

The action against the Sakhalin-2 venture, owned by Royal Dutch Shell and Japan’s two biggest trading houses, was “one-sided”, Japan’s Ambassador to Russia, Yasuo Saito, told a conference on Sakhalin Island.

Russia’s Natural Resources Ministry decided on Tuesday to give Shell one month to fix any environmental violations before taking away the liquefied natural gas project’s permit. The Russian Government is enforcing compliance at Sakhalin-2 as President Vladimir Putin tightens his grip over Russia’s oil and gas industry.

read more

Dow Jones Newswires: Putin Urges Move Vs Cos Breaching Licensing Deals

27 September 2006 / 16h18   
 
MOSCOW (AP)–President Vladimir Putin Wednesday urged Russian officials to take measures against companies that violate licensing agreements, as regulators probe several Western oil corporations over environmental concerns and allegations that they failed to adhere to the terms of their deals.

“I am counting on the (Natural Resources) Ministry and the government as a whole making these decisions, including with regard to those companies that work in bad faith and don’t fulfill licensing agreements,” Putin said in televised comments.

read more

RIA Novosti: Sakhalin-II off agenda as Putin meets natural resources minister

17:50 | 27/ 09/ 2006 

SOCHI, September 27 (RIA Novosti) — A meeting between Russia’s president and the natural resources minister made no mentioning of the massive Sakhalin-II energy project, which has been suspended over environmental concerns.

Minister Yury Trutnev warned Tuesday that the Royal Dutch Shell-led Sakhalin-II would be halted if no environmental guarantees were provided over the pipeline being laid as part of the massive energy project.

“We did not discuss Sakhalin-II,” Trutnev said after the meeting with Vladimir Putin.

read more

RosBusinessConsulting: ecological damage from Sakhalin-2 may exceed $50bn

Estimated damages from Sakhalin-2 project announced

RBC, 27.09.2006, Moscow 16:37:57.

The ecological damage from the Sakhalin-2 project may exceed $50bn, Deputy Head of Rosprirodnadzor Oleg Mitvol told journalists commenting on the statement made by the Vice President of Sakhalin Energy Igor Ignatiev that if the project was suspended direct losses would total $10bn.

Mitvol noted that Rosprirodnadzor had launched a complex inspection of the project on September 26. The inspection will last till October 25. After the inspection is completed Rosprirodnadzor will file a report and estimate the ecological damage.

read more

UPI: Kremlin defends its environmental record

September 27, 2006

Moscow is registering irritation that its putative environmental concern over a massive foreign-owned oil project is seen as a veil for nationalization.

The government’s Natural Resources Ministry recently pulled an environmental permit of the Sakhalin-2 petroleum project, which is led by Royal Dutch Shell PLC. That move followed an unsuccessful effort by Kremlin-controlled OAO Gazprom to gain a 25-percent stake in the lucrative project.

Since then Western governments, primarily Japanese and European, have blasted Moscow and warned that such tactics sour Russia’s foreign investment climate.

read more

Daily Telegraph: Database: Energy: Wednesday 27 September 2006

Energy

• Protesters kept Royal Dutch Shell from resuming work on a gas terminal in western Ireland that has already been delayed by more than a year.

• Royal Dutch Shell must fix environmental and safety problems for its $22bn Sakhalin-2 oil and gas project to continue, Russian Natural Resources Minister Yuri Trutnev said.

• Gassco, the operator of Langeled, a new natural-gas pipeline linking Norway and the UK, said Norwegian gas will be delivered to power stations, factories and other users in Britain starting Oct 1.

read more

Daily Telegraph: Shell given a reprieve in Russian oil row

By Tom Stevenson

(Filed: 27/09/2006)

Moscow has backed off from its campaign against Shell and other foreign oil companies after criticism from overseas governments.

In an announcement designed to lower the temperature in a simmering dispute over Shell’s involvement in the Sakhalin-2 oil and gas project, natural resources minister Yuri Trutnev said work could proceed on the project while a month-long environmental probe is carried out.

In dispute over Shell’s involvement in the Sakhalin-2 oil and gas project, natural resources minister Yuri Trutnev said work could proceed on the project while a month-long environmental probe is carried out.

read more

Gulf-Times: BP may lose $18bn field, warns Russia: “foreign-led ventures have become anomalies in Russia”

Published: Wednesday, 27 September, 2006
 
The foreign-led ventures have become anomalies in Russia as President Vladimir Putin increases state control over the energy industry, say market watchers

MOSCOW: BP Plc’s Russian venture, TNK-BP Holding, may lose its permit to develop the $18bn Kovykta natural-gas field in Siberia because of licence and environmental violations, Russian prosecutors said.

Valery Pak, the head of TNK-BP unit Russia Petroleum, was summoned to the Prosecutor General’s Office and “officially warned’’ his company must fix the problems or face losing its license in the Irkutsk region, according to a statement yesterday posted on the prosecutor’s website.

read more

Bloomberg: Shell, Japan Criticize Russia Over Sakhalin Threats (Update1)

By Christian Schmollinger and Lucian Kim

Sept. 27 (Bloomberg) — Royal Dutch Shell Plc and Japan’s ambassador criticized Russia’s threat to halt the $22 billion Sakhalin-2 oil and gas project, citing “abnormal” and “one- sided” demands.

The action against Sakhalin-2 may harm investors’ perceptions of Russia, Yasuo Saito, Japan’s ambassador to Russia, told the Sakhalin Oil & Gas Conference in Yuzhno-Sakhalinsk today. Multiple environmental inspections were “rather abnormal” and added to uncertainty, said Ian Craig, chief executive officer of the Shell-led Sakhalin Energy Investment Co.

read more

Lloyds List: Seeing red over Russian policy

EXTRACT: Russia wants to secure more control over its natural resources through taxation, deceit, bullyboy tactics, cunning and acquisitions. It will achieve this any which way it can and companies clearly need to be on their toes when dealing with the Kremlin.

THE ARTICLE

Published: Sep 27, 2006

AS the Sakhalin Oil ‘ Gas conference begins this week in eastern Russia, delegates will be no doubt be wondering if it is worth investing in the region given the state’s current tendency towards picking gaping holes in the existing project contracts.

read more

Il Sole 24 Ore (Italy): ENI fearful for Gazprom deal (In salita l’accordo tra Eni e Gazprom)

Published: Sep 27, 2006

Italian energy company ENI is reportedly concerned for its agreement with Gazprom after seeing deals between several of its western rivals and Russian companies blocked by Moscow.

The government in Russia has intervened to halt the progress of BP, Shell, Exxon-Mobil and Total in recent days, citing environmental or financial reasons, but there is concern that the real motive is favouring Russian companies, such as Gazprom and Rosneft, so they can be dominant in the country’s richest oil and gas fields.

read more

AP Worldstream: Official: checks at Shell-led Sakhalin project may not lead to revoking of license

By: ALEX NICHOLSON,
Published: Sep 27, 2006

Russia’s Foreign Minister said Wednesday that environmental checks being conducted at a Shell-led liquefied gas project off the far eastern island of Sakhalin will not necessarily lead to the revoking of its license.

Speaking at the first day of an international oil and gas forum on the island, Sergey Lavrov’s comments were aimed at reassuring western governments that have been rattled by a decision to pull a key environmental permit at the project, where LNG supplies have already been contracted 20 years ahead.

read more

Financial Post (Canada): Mackenzie go-ahead seems likely: Prentice ‘confident’

Published: Sep 27, 2006

CALGARY – With both sides set to resume negotiations on fiscal terms for the Mackenzie Valley Pipeline, the federal minister responsible for the project has issued a strong vote of confidence that it will go ahead.

Indian Affairs and Northern Development Minister Jim Prentice said he expects formal talks between Ottawa and oil companies to resume shortly, after lead partner Imperial Oil Ltd. stepped away over the summer to re-examine the entire project, including cost estimates that are expected to escalate, the number of construction seasons it would take to build it, and project parameters.

read more

Irish Independent: Protesters use prayers to block gas line workers

Published: Sep 27, 2006

A CHORUS of prayers drowned out the words of a garda superintendent yesterday as he demanded access for about 60 workers at the site of the proposed Corrib Gas terminal in Co Mayo.

Some 100 protesters loudly recited the Sorrowful Mysteries of the Rosary for up to 15 minutes until Supt Joseph Gannon, officer in charge of the Belmullet garda district, ordered work crews to leave the area.

It is understood that Shell, who expressed “extreme disappointment” at the continued blockade, will try again in the next few days to enter the site, possibly backed up by increased garda numbers or even Army members.

read more

Irish Times: Shell vows to restart gas project despite protest (*fighting talk from Shell)

By: Lorna Siggins, Western correspondent, and Tom Shiel, Irish Times
Published: Sep 27, 2006

Shell E&P Ireland has said it is its “firm intention” to return to work at the Corrib gas terminal at Bellanaboy, Co Mayo, following yesterday’s protest in which company workers were blocked from gaining access to the site.

The company has also offered additional payments of 10,000 annually to landowners on the onshore pipeline route, who are all eligible for small compensation amounts under compulsory acquisition orders.

read more

Financial Times: SAKHALIN 2 AWAITS ENVIRONMENTAL STUDY

By Arkady Ostrovsky
Published: September 27 2006 03:00 | Last updated: September 27 2006 03:00

Yuri Trutnev, Russia’s minister for natural resources, yesterday said Moscow would not take any decision on whether to stop the Shell-led Sakhalin 2 project until a month-long environmental study had been completed, Arkady Ostrovsky writes from Moscow.

“Until the end of the probe, the expert opinion won’t be cancelled. If it is cancelled, further work becomes illegal,” Mr Trutnev said.

read more

MarketWatch: Sakhalin Energy confident permit issues will be resolved quickly

YUZHNO-SAKHALINSK, Russia (MarketWatch) — Sakhalin Energy’s chief executive said Wednesday he was confident his company would resolve a conflict over alleged environmental violations soon.

“I do believe these issues will be resolved very quickly with the ministry” said Ian Craig, referring to Russia’s Ministry of National Resources.

Russian authorities had threatened to pull a key environmental permit for the company, a move Sakhalin Energy said Tuesday could create an additional $10 billion in costs for the project.

read more

MarketWatch: Gazprom inclusion may ease sakhalin-2 regulatory pressure

YUZHNO-SAKHALINSK, RUSSIA (MarketWatch) — The entry of Russian gas giant OAO Gazprom (GSPBEX.RS) into Sakhalin-II will likely result in the alleviation of regulatory pressure on the project’s operator, Sakhalin Energy Ltd., a member of Russia’s chamber of commerce, told a conference on Sakhalin Island Wednesday.

“We must introduce Russian participation, of course that means Gazprom,” said Zalery Garipoz, head of the chamber’s oil industry development committee.
Once Gazprom enters the project, “there will be no more criticism of Sakhalin Energy, there will be only ‘hoorah’,” he said.

read more

The Guardian: Russia denies ulterior motives over Sakhalin

· Permit withdrawn ‘for ecological reasons’
· Official says no political or economic issues involved

Tom Parfitt in Moscow and Terry Macalister
Wednesday September 27, 2006

A senior Russian official has hit back at western accusations that Moscow is deliberately raising environmental obstacles against Shell and other foreign companies as part of a political mission to seize back control of energy reserves.

In an interview with the Guardian, Oleg Mitvol defended the government’s decision last week to revoke a 2003 environmental assessment that approved the development of huge oil and gas reserves off Sakhalin Island in the Russian far east.

read more

Reuters: Russian minister calms energy policy worries: agencies

Wed Sep 27, 2006 2:05 AM ET

MOSCOW (Reuters) – Russian Foreign Minister Sergei Lavrov sought to alleviate Western concerns over Russian energy deals on Wednesday, saying talk of revising production sharing deals or pushing foreigners out of the sector was unfounded, Russian news agencies reported.

A recent barrage of threats from Russian officials to withdraw an ecological permit for the Shell-led Sakhalin-2 oil and gas project have sparked fears that Russia wants to renegotiate the production sharing agreement (PSA).

read more

AFX News Limited: Russia alleges violations of safety rules at Sakhalin 2 site

09.27.2006, 12:08 AM

YUZHNO-SAKHALINSK, Russia (XFN-ASIA) – Russian officials warned that safety rules have been violated at the the Sakhalin-2 oil and gas site, a week after Moscow revoked environmental authorisation for the project of Royal Dutch Shell and Japanese firms Mitsui and Co and Mitsubishi Corp.

‘There have been quite a lot of violations of industrial safety rules … this worries our inspectors,’ Konstantin Pulikvosky, head of the environmental, engineering and nuclear monitoring agency Rostekhnadzor told an energy conference here.

read more

The Guardian: Shell hailed troubled gas project as world model

Terry Macalister and Rob Evans
Wednesday September 27, 2006

Shell told the British government earlier this year that the now troubled Sakhalin-2 project could become a model for future operations worldwide. The boasts were made by Shell UK’s chairman, James Smith, in a meeting with Hilary Benn, the international development secretary, and the European Bank for Reconstruction and Development (EBRD) in London.

Despite criticism about the scheme from green campaigners – and from the Kremlin in the past week – Shell said it had broken new ground by establishing Russia’s first offshore project and had handled the environment with care.

read more

MosNews: Russia Won’t Push Foreigners Out of Energy Sector — Foreign Minister

Mosnews

(Russian Foreign Minister Sergei Lavrov)

Created: 27.09.2006 11:54 MSK (GMT +3), Updated: 11:54 MSK

On Wednesday, Sept. 27, Russian Foreign Minister Sergei Lavrov sought to alleviate international concerns of energy deal, saying talk of revising production sharing deals or pushing foreigners out of the sector was unfounded.

MosNews has reported that Russian environmental watchdog and Natural Resources Ministry has threatened to withdraw a permit for Shell-led Sakhalin-2 oil and gas project.

The Russian authorities have also made some similar threats about Exxon-led Sakhalin-1 project, Total’s Kharyaga gas field prject and TNK-BP’s Kovykta gas condensate project. The threats have sparked fears that Russia wants to renegotiate the production sharing agreements (PSA) it signed with these companies earlier.

read more

International Herald Tribune: Official: checks at Shell-led Sakhalin project may not lead to revoking of license

The Associated Press
Published: September 27, 2006
 
MOSCOW Russia’s Foreign Minister Sergey Lavrov said Wednesday that the environmental checks being conducted at a Shell-led liquefied gas project off the far eastern island of Sakhalin will not necessarily lead to the revoking of its license.
 
“The checks that are being carried out by no means signify that the licenses for exploration as part of the Sakhalin-2 project will be revoked,” Lavrov said at an oil and gas forum on Sakhalin in televised remarks.
 
“The aim of the checks is solely to ensure that all sides abide by the terms of the agreement in good faith.”
 
Last week authorities announced that they would revoke a key environmental permit at Royal Dutch Shell PLC’s Sakhalin-2 project.
 
Observers interpreted the move as a means to pressure the company to secure better terms for state gas monopoly OAO Gazprom, which is seeking to join the project.
 
“The opinion of squeezing out foreign investors from the fuel and energy sector are groundless,” Lavrov was quoted as saying by the Interfax news agencies.
 
Natural Resources Minister Yuri Trutnev said Tuesday that authorities will try to avoid shutting down the project, but insisted that it was riddled with environmental violations that needed to be addressed if the project is to be allowed to continue.
 
Igor Ignatyev, Sakhalin Energy’s vice president for corporate affairs, has warned that a decision to revoke the permit could lead to delays of 17 months and 15,000 redundancies.
 
The case comes amid pressure on a number of foreign-controlled energy projects that observers say is an attempt to secure a bigger role for Russian companies. 

read more

The Wall Street Journal: California Oil Tax

WSJ Chart

Venture Firms Ignite Bitter Fight
With Push for California Oil Tax

By GEORGE ANDERS and REBECCA BUCKMAN
September 27, 2006; Page A1

Still smarting from California’s recent enactment of emissions caps, the oil industry is confronting another assault in the Golden State — this one bankrolled in part by Silicon Valley tycoons pushing to fund conservation and alternative-energy initiatives with a tax on oil output.

Two of the nation’s most influential constituencies are locked in an increasingly nasty battle over a ballot initiative that could squeeze an estimated $4 billion over the next decade from oil producers in California through a tax that would be as high as 6% a barrel. Energy companies already pay such levies in most other oil-producing states, but the hit in California would be especially steep, given that some 13% of the nation’s oil output is generated there.

read more

The Wall Street Journal: Oil News Roundup: September 26, 2006 4:41 p.m.

THE WALL STREET JOURNAL ONLINE
September 26, 2006 4:41 p.m.

Crude-oil futures continued their recent volatile trade, falling to close at nearly $61 a barrel on the New York Mercantile Exchange after rising nearly $1 on Monday. Here is Tuesday’s roundup of oil and energy news.

* * *
ALASKA LEASE SALE HALTED: A federal judge late Monday halted the sale of federal oil leases on a portion of Alaska’s North Slope that environmentalists have pinpointed as a haven for migratory birds and calving caribou. The decision blocks the sale of about 1.7 million acres that the Bureau of Land Management had planned for Wednesday. The sale would have included the Teshekpuk Lake area, which sits above 2 billion barrels of recoverable oil.

read more

Sakhalin II Cost Overrun: $20 billion, £22 billion, $25 billion or $26 billion?

Dear Mr Van der Veer

Reference my email of 26 Sept: Email to Jeroen van der Veer: the Sakhalin II crisis

Bloomberg have been in contact with me overnight kindly providing the precise calculation for the Sakhalin II $22 billion project cost (which they have cited again in an article published today).  In other words, it was not an error, but a deliberate step up in the figure quoted: a Bloomberg article on 24 September was still quoting the $20 billion figure.  

Confusion reigns… 

A Wall Street Journal report this morning is still using the $20 billion sum. 

read more

The Wall Street Journal: Russia Softens Tone Regarding Sakhalin Project

By GREGORY L. WHITE
September 27, 2006

MOSCOW — Taking a more conciliatory tone with one of the world’s largest energy projects, Russian regulators gave Royal Dutch Shell PLC a month to come up with plans to rectify what they called major environmental violations before a possible shutdown of the $20 billion operation.

“We fully understand the investment significance of this project,” Minister of Natural Resources Yuri Trutnev said yesterday. “We want to do everything possible within our power to avoid stopping the project, but whether we’re able to do that depends on the company.”

read more

Bloomberg: Russia May Hurt Reputation Over Sakhalin, Japan Says (Update2)

By Christian Schmollinger and Lucian Kim

Sept. 27 (Bloomberg) — Russia’s threat to halt a $22 billion oil and gas project may damage the nation’s reputation among overseas investors amid criticism the process lacks transparency, a Japanese official said.

The action against the Sakhalin-2 venture owned by Royal Dutch Shell Plc and Japan’s two biggest trading houses is “one- sided,” Yasuo Saito, Japan’s Ambassador to Russia, told a conference on Sakhalin island.

read more

RIA Novosti: Inspections do not mean an end to Sakhalin II PSA — minister

09:53 | 27/ 09/ 2006 

MOSCOW, September 27 (RIA Novosti) – Russian Foreign Minister Sergei Lavrov said Wednesday that inspections of the $20 billion Sakhalin II energy project off Russia’s Pacific coast do not necessarily mean the revocation of licenses under a production-sharing agreement (PSA).

The Ministry of Natural Resources last Monday annulled the Sakhalin Environmental Expert Review (SEER), passed in 2003, over an alleged threat of mudslides near the project’s pipeline.

read more

The Times: EBRD delays verdict on Sakhalin funding

By Carl Mortished, International Business Editor
 
POLITICAL turmoil surrounding Shell’s Sakhalin-2 gas project has forced the European Bank for Reconstruction and Development (EBRD) to postpone a decision on providing finance for the development.

Further deliberation by the EBRD will worry Shell, which is anxious for the bank’s signature of approval, notably in connection with the EBRD’s extensive social and environmental impact assessment of the project. 
 
The EBRD was expected to provide loans of €400 million (£267 million) to the Sakhalin Energy Investment Company, a consortium including Shell, Mitsui and Mitsubishi. Removal of an environmental permit by the Russian Natural Resources Ministry last week has caused the bank to delay its decision.

read more