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Lloyds List: Study could further delay Sakhalin II

Published: Aug 04, 2006

LIQUEFIED natural gas exports from the $20bn Shell-led Sakhalin II project could be further delayed if pipeline construction activities are halted by ministry authorities, writes Martyn Wingrove.

Russia’s Natural Resources Ministry has asked Sakhalin Energy Investments Co to halt pipeline work over of concerns for safety and the environment.

The ministry is studying the potential of landslides along the course of the island-long pipelines that will link oil and gas fields in the north to a LNG plant and tanker terminal in the south. Officials anticipate the study could be completed by the end of this month, and could prepare a lawsuit to demand pipeline construction work is suspended operations do not stop.

The second phase of development work on Sakhalin II was scheduled to allow LNG exports to commence in the summer of 2008. It is around 75% complete, but already a year behind schedule.

Sakhalin Energy has sold almost all of the 9.6m tonnes per year of LNG production to Asian and US buyers so will not want more delays to construction work.

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