December 12th, 2006:

(Oleg Mitvol)

By Upstream staff

Russia’s environmental agency said today it may triple its claim for damages against the Shell-led Sakhalin 2 project to $30 billion after being advised to do so by Western lawyers.

“We will be ready to take legal action from March,” said Oleg Mitvol, deputy head of environmental agency RosPrirodNadzor.

Industry sources earlier said that Shell was prepared to cede majority control in its $22 billion oil and gas project on the Pacific island to gas monopoly Gazprom. read more

John Vidal
Wednesday December 13, 2006

If the National Union of Teachers is quick, it might just be able to get hold of 50,000 free DVDs of Al Gore’s film, An Inconvenient Truth, and use them to explain to every child in Britain the reality of climate change.

The DVDs, sitting in a Los Angeles warehouse, were destined for America’s huge National Science Teachers Association, but were declined on the basis that free teaching materials could not be accepted, nor political endorsements given. read more

Terry Macalister and Tom Parfitt in Moscow
Wednesday December 13, 2006

Shell is fighting a rearguard action against attempts by the Kremlin to seize control of the world’s largest liquefied gas project, Sakhalin-2, at a knockdown price by insisting that it will only hand over assets as part of a wider peace settlement.

The demands by the Shell chief executive, Jeroen van der Veer, followed renewed attacks on the company’s environmental record yesterday in which a Russian state agency said it would be seeking damages of $30bn (£15.4bn). read more

Last Updated: 1:20am GMT 12/12/2006

The world’s largest gas company, on which Europe is reliant for supply, is a fiefdom of the former KGB man who appointed his deputy as chairman, writes Adrian Blomfield

The critics, of which there are plenty, despairingly dismiss it as phallic, unharmonious and a soulless manifestation of the corporate ego. For Kremlin loyalists, though, it is a thing of beauty and innovation, a symbol of Russia resurgent.

But on one thing everyone agrees: Gazprom’s new headquarters in St Petersburg, plans for which were unveiled earlier this month, will be very big. read more

Dulue Mbachu
December 12, 2006 – 2:05 p.m.

(AP) – LAGOS, Nigeria — The West African host of this week’s OPEC meeting has seen its oil industry hobbled by militant attacks and pipeline sabotage, making Nigeria a reminder of the vulnerabilities of world supplies as the cartel prepares to discuss production quotas.

OPEC was meeting for the first time in Nigeria, which currently holds the cartel’s presidency. A small OPEC delegation visited the country in 1972, but a spokesman for Nigeria’s oil ministry, Levi Ajuonuma, said the West African country had never hosted a general meeting of the organization. read more

Dec 12th 2006

Russia’s bullying of Shell, over a huge gas project, shows it is becoming a riskier place to do business

THE quest for oil demands flexibility when operating in harsh environments, and big companies are used to accommodating some unsavoury regimes. These days few places are tougher than Russia, where Royal Dutch Shell has been forced to bend over backwards. On Monday December 11th the Anglo-Dutch energy giant reportedly offered to cede control of Sakhalin II, a huge natural-gas project in the east and the country’s biggest single foreign investment, to Gazprom, the state-controlled gas titan. Shell and its two Japanese minority partners succumbed after months of bullying by the government, which has now acquired a big chunk of a private enterprise. read more

By Tom Bergin

LONDON (Reuters) – Gazprom may pay Royal Dutch Shell for money already spent developing the Sakhalin-2 oil and gas fields if it buys a stake, but analysts do not expect the Russian giant to pay a premium for expected profits or control.

Shell has offered to cede control of the project, Russia’s biggest single foreign investment, to the world’s largest gas company after months of government pressure, industry sources told Reuters on Monday.

On Tuesday Gazprom Chairman Dmitry Medvedev said his company planned to buy around 50 percent of the Shell-led project, which is based off Russia’s east coast. read more

20:34 | 12/ 12/ 2006 

MOSCOW, December 12 (RIA Novosti) – Gazprom [RTS: GAZP] is interested in joining the Sakhalin-II oil and gas project in Russia’s Far East, but not at any price, the first Russian deputy prime minister said Tuesday.

“Any business has its own price. Therefore, it is important to discuss the conditions of joining the company,” said Dmitry Medvedev, who is also the board chairman of the Russian energy giant.

He said Gazprom heads met with representatives of project operator Royal Dutch Shell and Russian Industry and Energy Minister Viktor Khristenko earlier this week. read more

12 Dec 2006 18:20:12 GMT
By Oleg Shchedrov and Tom Miles

MOSCOW, Dec 12 (Reuters) – Russia’s Gazprom closed in on half of Royal Dutch Shell’s $22 billion Sakhalin-2 energy project on Tuesday while Shell denied it had buckled under Kremlin pressure and warned Moscow the world was watching.

“The two sides are close to reaching an agreement over how Gazprom can enter this project,” the gas monopoly’s Chairman Dmitry Medvedev, who is first deputy prime minister, said after signals emerged that Shell would cut a deal. read more

Business comment
By Damian Reece, City Editor
Last Updated: 1:20am GMT 12/12/2006

Royal Dutch Shell is coming to terms with an inevitable mugging at the hands of the Russian state. Luckily it is well used to such economic GBH having been pumping oil out of British waters for years. Gordon Brown is just the latest in a long line of Chancellors who have launched smash-and-grab raids on the industry using the equally effective, and only slightly less brutal weapon, of windfall taxes.

Grabbing a share of the profits of the global energy industry is a well rehearsed political manoeuvre that generally goes down quite well with large parts of the population. Russia is no paragon of democratic virtues but even if it was, I doubt Russian voters would have opposed their government’s campaign to extract a higher price out of Shell than the oil giant has so far paid for control of the Sakhalin-2 project, the world’s biggest liquified natural gas resource. read more

By Russell Hotten, Industry Editor
Last Updated: 1:20am GMT 12/12/2006

Sakhalin is a remote, austere island in the furthermost reaches of Russia – a haven for wildlife, and home to one of the richest oil and gas reserves on the globe.

And in the past few months these two issues have clashed to cause an international political storm that looks likely to do lasting damage to Russia’s relations with western companies. For months Shell has been bombarded with threats from Russian state agencies that it has breached environmental rules. read more

By Russell Hotten
Last Updated: 1:21am GMT 12/12/2006

Royal Dutch Shell has bowed to pressure from the Russian government to allow state-owned energy company Gazprom to take over its Sakhalin-2 oil and gas field.
 
The Anglo-Dutch oil company said yesterday that it has made several proposals to Moscow and Gazprom. These are understood to involve Shell and its partners giving up control of the $20bn (£10.2bn) project.

The move by the Kremlin will be seen as a sign that Russia will no longer tolerate foreign investors controlling strategic assets. read more

Last Update: 5:50 AM ET Dec 12, 2006

MOSCOW (MarketWatch) — Oleg Mitvol, the deputy head of Russia’s environmental watchdog Rosprirodnadzor, said Tuesday his agency would file lawsuits against foreign companies developing the Sakhalin-2 oil and gas project in the spring of 2007, Russian news agency Interfax reported.

Mitvol said his agency plans to file suits in Russian courts and in Stockholm around March.

Mitvol said that a preliminary assesment of the damage to Sakhalin Island inflicted by the Sakhalin Energy Ltd. consortium and its subcontractors was around $10 billion, although Mitvol has cited figures as high as $50 billion. read more

14:26 | 12/ 12/ 2006 

MOSCOW, December 12 (RIA Novosti) – Court proceedings on compensation for environmental damage inflicted by the Sakhalin II oil and gas project in Russia’s Far East are likely to start in March 2007, the environmental watchdog said Tuesday.

The $22-billion project, controlled by Royal Dutch Shell, has been accused of causing serious damage to Sakhalin Island’s ecology, including deforestation, toxic waste dumping and soil erosion.

“I think we must be ready to start court proceedings by early March,” said Oleg Mitvol, deputy head of the Federal Agency for the Oversight of Natural Resources. read more

Tue Dec 12, 2006 11:25 AM GMT

MOSCOW, Dec 12 (Reuters) – Russia’s environmental agency said on Tuesday it may triple a damages claim against the Royal Dutch Shell-led (RDSa.L: Quote, Profile , Research) Sakhalin-2 energy project to $30 billion after being advised to do so by Western lawyers.

The outspoken deputy head of the agency, Oleg Mitvol, who has repeatedly accused Shell of breaching environmental law on the Pacific island of Sakhalin, said he was determined to press ahead with legal action regardless of Shell’s future role. read more

12 December 2006
 
Life is anything but a gas for foreign business interests in Russia, as Gazprom moves closer towards wresting control of Sakhalin-2, the giant Siberian gas project, from Royal Dutch Shell. The news emerges as The Times reports that foreign energy companies will in future not be welcome as owners in Russia’s energy industry, only as subcontractors.

More on Russia

Most broadsheets lead with reports that Shell has made a new proposal in negotiations over Gazprom’s participation in Sakhalin Energy, the company building a $20 billion (£10.2 billion) liquefied natural gas scheme in Eastern Siberia. read more