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Russia’s ruthless seizure of Royal Dutch Shell Sakhalin2 project

By John Donovan

Gazprom is on the brink of sealing a takeover of the huge Sakhalin2 oil and gas project, the biggest of its kind in the world. The seizure has been engineered by the Putin regime which controls the ravenous Russian energy giant.

We are witnessing momentous events in Russia which could change the balance of global stability.

The moves by the Putin regime could be viewed as a renationalisation policy in the best interest of the Russian people. Others may suspect less noble motives by a regime driven by ego, corruption and a desire for return to superpower status.

The Russian energy dominoes are falling. First the seizure of Yukos in the most dubious circumstances, followed by the environmental blackmail tactics used against a timid Shell management running the Sakhalin2 project. Shell capitulated without putting up a fight. Putin must have taken note of how quickly Shell CEO Jeroen van der Veer threw in the towel when Hugo Chavez played the resource nationalism card in Venezuela.

I innocently played a significant role in the Russian assault on Sakhalin Energy, the company in which Shell was the majority shareholder. I co-own with my father, Alfred Donovan the website www.royaldutchshellplc.com described by the so-called “Kremlin attack dog” Oleg Mitvol, as an anti-Shell website. More information about our activities can be found on Wikipedia: http://en.wikipedia.org/wiki/Royaldutchshellplc.com

Mr Mitvol, acting in his capacity as Deputy Head of the Russian environmental agency RosPrirodNadzor, led the campaign against Shell. He has gone on record as stating that I supplied the evidence on which the Russian government was bringing a multibillion dollar lawsuit against Sakhalin Energy on alleged environmental grounds. Mitvol threatened a claim for $5 billion which later increased to $30 billion immediately prior to Shell’s surrender. The quotes from Mitvol can be read in a recent Prospect Magazine article which correctly stated that my involvement cost Shell billions:
http://www.prospect-magazine.co.uk/article_details.php?id=8209

I hoped when I supplied the information that Mitvol was acting out of legitimate genuine concern for the environment, rather than part of a ruthless plan to seize control of the Sakhalin2 project by Gazprom/Putin. I had in mind the plight of the endangered Western Pacific grey whale. The population is down to about 100 and of those only two dozen or so are females of breeding age. The only feeding ground is around Sakhalin Island. I also wanted to embarrass Shell. However, I soon had doubts about my contact with Mitvol and these grew as a result of subsequent events.

In the interview Mitvol said that he had called in Russian “special services” to investigate the authenticity of the information I had supplied to him. It struck me as being odd at the time that he did not ask if I could put him into direct contact with the Shell insider who supplied the Shell internal documents which I had passed on to him, or if I could supply any original documents for forensic examination. I heard nothing from Mitvol. I deduced that the reference to “special services” was to intimidate Shell management. There had been allegations in the press about the untimely demise of perceived enemies of the Kremlin.

I later offered further evidence to Mitvol and subsequently to Mark Stephens of Finers Stephens Innocent, the London law firm acting for RosPrirodNadzor. I received no response from Mitvol. I did receive a reply from Mark Stephens, but it tended to confirm my suspicion about the bone fides of the campaign which the Russians had mounted against Shell. I also carried out some Internet research into Mitvol. The information revealed was interesting to say the least.

On reflection it is now plain that I played a key role in an event which set a precedence for what looks likes turning into a renationalisation programme (perhaps better described as a privatisation by Putin/Gazprom) of most of the huge gas and oil reserves in Russia. Without the documentary evidence I supplied, the Putin government might not have felt sufficiently emboldened to risk the wrath of other nations. Without its success in forcing Shell to surrender, it might not now be turning the screws on other oil company projects in Russia. The Putin regime already has BP, ExxonMobil and Total projects in their sights.

http://www.huliq.com/18860/russia-s-ruthless-seizure-of-royal-dutch-shell-sakhalin2-project

2 Comments on “Russia’s ruthless seizure of Royal Dutch Shell Sakhalin2 project”

  1. #1 Mrityunjaya sarangi
    on Jan 25th, 2008 at 04:16

    Dear All,

    I just want to know what is the position od Shell in russia . Is it good or bad. Is it true that russia does not allow foreign company to invest in OIL and gas sector.let me know what about the current position

    Many thanks

  2. #2 John
    on Apr 18th, 2007 at 22:00

    You may have in fact contributed to the demise of the Sakhalin II project, through the guise of helping to protect the environment. A very unexpected consequence, I’m sure you’ll admit, and in hindsight, a huge mistake on your part.

    However, the result was predestined prior to whatever information you may have provided to the FSB, oops, I mean the the Russian environmental watchdog, Mr. Mitvol. Mr. Khodorkovsky was the beginning, and was the yardstick by which the Kremlin observed the world’s reaction to renationalization. Knowing they couldn’t get Shell, Exxon, and BP for tax crimes like they did Khodorkovsky, they will simply strip them of their assets/investments the old fashioned way, by appealing to the “hearts and souls” of the environmentalists and engaging them to do their dirty work.

    The Russian mentality is quite an interesting one. They have a huge untapped resource base, and they will do everything in their power to use the assets of others to develop them, and then they will nationalize them, and use them as a political weapon. It’s coming, and Russia will be a force to reckon with in the future.

    My suggestion to you and the rest of the environmentalists is simple….while your zest to protect the environment may be a noble endeavor, in developing countries like this, your actions may have the worst unintended consequences you can imagine. If you think Gazprom is a better operator than any of the major oil companies, you’re sorely uninformed.

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