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St Diplomatic flak for Moscow’s Sakhalin move

Big News
Wednesday 20th September, 2006 (UPI)

Japan, Britain and the European Union are pressuring Russia not to renege on a signed agreement with foreign investors to develop a huge oil and gas field.

In the 1990s the Kremlin signed a series of production-sharing agreements, known as PSAs, with various western energy companies to develop Pacific Rim oil and natural gas reserves.

But since then Moscow has begun using its state-run OAO Gazprom to nationalize natural resources. Gazprom pushed Royal Dutch Shell PLC, which is running the $20 billion Sakhalin II project, to deal it in for a 25-percent stake in exchange for a 50-percent stake in a smaller Russian natural gas field.

RDS then said costs for Sakhalin II had soared, effectively making Gazprom’s offer of a half interest insufficient compensation. In response, the Kremlin started pulling environmental permits and last week ordered production to stop.

Now London, Brussels and Tokyo are pressuring Moscow to respect its Sakhalin PSA, though analysts say such efforts will fail.

It’s a strong sign that all the PSA oil fields could be taken and given to the state, said Konstantin V. Remchukov, a former member of parliament who helped draft the law that created the PSAs. They are dreaming up reasons to renegotiate. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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