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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


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


• 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