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UPI: Kremlin ready to block Shell Sakhalin II project

MOSCOW, Russia (UPI) — Moscow appears ready to block a $20 billion natural gas project, led by the Royal Dutch Shell Group PLC, on the Pacific Ocean island of Sakhalin.

The formal reason is the Federal Service for the Supervision of Natural Resources, which says environmental recommendations of the project — the world`s largest integrated oil and natural gas venture — are ‘unfulfilled,’ the BBC reported Tuesday. The service wants the nation`s Natural Resources Ministry to repeal its approval of the project.

Non-Russian observers, as well as Russian journalists, say the objections are a Kremlin ploy to shoehorn state-owned OAO Gazprom into an ownership position of the venture, Voice of America said. Gazprom has been trying for some time to gain a slice of the project, known as Sakahlin-2.

RDS and its Japanese partners were preparing to begin natural gas shipments in 2008. The areas being developed hold reserves of about 1 billion barrels of oil and 500 billion cubic meters of natural gas, enough to meet 8 percent of the world`s LNG demand.

The project entails building two large offshore platforms and two 500-mile pipelines to carry production to onshore processing facilities.

Copyright 2006 by United Press International

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