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Mail on Sunday: Shell in Russian pipeline turmoil

Mail on Sunday: Shell in Russian pipeline turmoil

“SHELL has been forced to delay full production at its giant Sakhalin oilfield off the coast of eastern Siberia until 2008. It is yet another blow for the oil giant, which had previously postponed the controversial project to 2007. Shell stunned the market last month, revealing that costs on the Sakhalin II project had doubled to £10.5 billion.”

Posted 8 August 2005

By TomMcGhie

SHELL has been forced to delay full production at its giant Sakhalin oilfield off the coast of eastern Siberia until 2008.

It is yet another blow for the oil giant, which had previously postponed the controversial project to 2007.

Shell stunned the market last month, revealing that costs on the Sakhalin II project had doubled to £10.5 billion.

The Russian project, one of the most important in Shell’s portfolio, has been plagued with technical and environmental problems from the start.

Environmentalists’ protests over pipe-laying across salmon rivers on the island of Sakhalin and through grey whale breeding grounds played havoc with the timetable. The pipeline linking the offshore fields to Sakhalin had to be re-routed.

Shell admitted in July that there would be delays to year-round oil production because of problems with the pipeline.

A spokeswoman denied these delays were caused by extra work to get around grey whale breeding grounds and blamed the harsh environment.

Sakhalin Energy, 55 per cent owned by Shell, exports oil only in the summer because the sea to the north of the island freezes in the winter.

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