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MosNews: Russian Environmental Watchdog Begins Sweeping Check of All Sakhalin Projects

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EXTRACT: Some analysts view RosPrirodNadzor’s moves as part of a move by the Kremlin to tighten its grip on the strategic energy sector and a deliberate clampdown on Exxon and Shell’s production sharing agreements, the only energy projects exempt from Russia’s sky-high oil taxes.

THE ARTICLE

Created: 11.09.2006 15:25 MSK (GMT +3), Updated: 15:25 MSK
 
Russian environmental watchdog RosPrirodNadzor has begun checking oil projects on Sakhalin Island run by U.S. major ExxonMobil and Russia’s Gazpromneft, subsidiary of gas giant Gazprom, it was reported on Monday, Sept. 11.

Nikolai Nam, the deputy head of RosPrirodNadzor’s natural resources arm on the Pacific island, told Interfax that the organization had begun a planned check of offshore work at the Sakhalin-1 project, operated by Exxon, on Sept. 6.

MosNews has already reported last week that the environmental agency has asked a court to recognize that a $20 billion venture on Sakhalin, led by Royal Dutch/Shell, does not comply with environmental rules, which could bring work on the project to a halt. At the same time the Russian authorities said that they will not abandon the existing production-sharing agreements, signaling that the project is not in grave danger.

Some analysts view RosPrirodNadzor’s moves as part of a move by the Kremlin to tighten its grip on the strategic energy sector and a deliberate clampdown on Exxon and Shell’s production sharing agreements, the only energy projects exempt from Russia’s sky-high oil taxes.

Exxon, which has just begun exporting from Sakhalin-1, has warned Russia that interfering with the terms of its production sharing agreement could spook other foreign investors.

Nam said the watchdog’s investigation would cover Exxon’s Orlan platform, sea pipelines and the Chayvo onshore drilling platform.

Project operators had until Sept. 18 to provide documents on their work, which would be analyzed to see whether environmental rules and license conditions had been adhered to. The results will be released on Oct. 2, the official said.

The Sakhalin-1 project cost around $12.8 billion and is expected to pump 250,000 barrels of crude per day at full capacity by year-end. The other shareholders are state-controlled oil company Rosneft, India’s ONGC, and Japan’s Sodeco.

The Russian official also said the agency was checking license conditions and geological work at the Lopukhovsky block in the Sakhalin-4 licence area. The Lopukhovsky license is 75 percent owned by TNK-Sakhalin, a Gazpromneft subsidiary, and 25 percent owned by the local government. Sakhalin-4 itself is 51 percent owned by Russian state oil firm Rosneft and 49 percent by Britain’s BP Plc.

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