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Times Online: Russia tries to shut down Shell gas field

By Michael Herman and Agencies in Moscow
 
The Russian environmental watchdog today launched a legal challenge to halt construction at Sakhalin-2, a $20 billion (£10.6 billion) gas project led by Royal Dutch Shell. It came as the energy giant remained locked in an ownership dispute with Gazprom, the Russian state-owned energy company.
 
The Rosprirodnazor said in a statement that it asked a Moscow court to overturn the watchdog’s earlier decision that the world’s biggest liquefied natural gas (LNG) project was environmentally safe.

“If the demands of the suit to cancel the ecological report are satisfied, then work and other activities as part of the Sakhalin-2 project will be forbidden until the receipt of a new ecological report and the elimination of all the breaches of ecological legislation,” the Rosprirodnazor said.

A spokesman for Shell declined to comment.

Sakhalin Energy, the company that runs the gas field, said it was surprised at the lawsuit and did not believe that any of the minor breaches uncovered in Rosprirodnazor audits were grounds for revoking its original decision.

The lawsuit is the most serious of a series of challenges against Sakhalin-2, which is 75 per cent complete and which Shell estimates will produce 9.6 million tonnes of LPG annually.

Sakhalin Energy said Russian Government agencies  have inspectred the oil field 200 times this year . Last month the Rosprirodnazor ordered Shell to halt construction at a specific section of the gas field, citing environmental and ecological concerns.

A dispute between Shell and Gazprom over ownership of the project remains unresolved.

Shell, which owns 55 per cent of the project, agreed to give Gazprom a 25 per cent stake in Sakhalin-2 in exchange for 50 per cent of Gazprom’s Zapolyarnoye natural gas field in Siberia.

But a few days after signing the deal, Sakhalin Energy doubled its cost estimates for the project to $20 billion (£10.6 billion) leading Gazprom to say the deal was no longer fair and demand improved terms.

The two sides have yet to agree a deal and analysts have speculated that today’s lawsuit is designed to pressurise Shell into offering Gazprom better terms.

Gazprom has said it has no influence on any decisions taken by the environmental watchdog.

Japan’s Mitsui owns 25 per cent of Sakhalin-2, with Mitsubishi, also of Japan, holding the remaining 20 per cent.

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