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Shanghai Daily: Russia looks at suing Shell

Last Updated(Beijing Time):2006-08-07 15:09
 
Russia said it will sue Royal Dutch Shell Plc to halt the development of oil and gas fields at Sakhalin Island because the US$20 billion project’s pipelines may cause environmental damage.

The Ministry of Natural Resources plans to sue the Shell-led group in a bid to overturn authorizations for developing the Piltun-Astokhskoye and Lunskoye fields, the ministry said in an e-mailed statement at the weekend, Bloomberg News reported.

The same ministry told Shell it should suspend construction of a pipeline at the project until it can complete environmental and safety studies.

Stopping the project would risk augmenting the costs for Shell and might strengthen state-run OAO Gazprom’s efforts to obtain a stake in the venture. President Vladimir Putin has used the natural gas producer and OAO Rosneft to tighten his control over the nation’s energy resources.

“The announcement can be interpreted as piling the pressure on Shell,” said Chris Weafer, chief strategist at Alfa Bank in Moscow. A spokesman for the Sakhalin Energy project in Moscow said construction hadn’t been halted.

The 800-kilometer onshore pipelines are crucial for the project, as they will bring oil and gas from the two offshore fields to Russia’s first liquefied natural gas plant and an ice-free oil export terminal that are being built further south. Costs for the second phase of the venture, the biggest foreign investment in Russia, last year doubled. The ministry this year has made a series of complaints about Total SA’s Kharyaga oilfield development in the Arctic.

 

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