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MarketWatch: Dutch foreign minister seeks Russia meeting on Sakhalin -spokesman

Last Update: 4:49 PM ET Sep 21, 2006

LONDON (MarketWatch) — Dutch Foreign Minister Bernard Bot is seeking a meeting with his Russian counterpart, Sergey Lavrov, to clarify the reasons why a key Russian environmental permit was withdrawn from a Royal Dutch Shell PLC (RDSB.LN) venture, a spokesman for the Dutch minister said Thursday.

Russia’s Ministry of Natural Resources said Monday it was withdrawing its approval for the second phase of the Sakhalin II oil and gas project led by the Anglo-Dutch energy major because of allegations it had violated terms of the deal. Shell denies this.

“It’s logical we are trying to ask the Russian authorities about the reasons behind the withdrawal of the permit,” the spokesman said.

Both ministers are currently in New York but their respective agendas have so far prevented the meeting to take place, he said.

The move by the Russian authorities has sparked an uproar in the West. Some analysts have speculated the Sakhalin woes support a larger agenda of reordering a production sharing agreement signed in the 1990s and now no longer popular with the Russian government.

Earlier Thursday, a U.K. Foreign Office spokesman said it is “very concerned about this issue…We’re expressing our concerns to the Russian government at a number of levels.”
The European Commission has said it was taking Russia’s withdrawal of the permits seriously.

While Shinzo Abe, the expected successor to Japanese Prime Minister Junichiro Koizumi, said a major delay to Sakhalin could hurt diplomatic relations.

Shell is headquartered in the Hague, in the Netherlands but incorporated in the U.K.
The Sakhalin Energy consortium, which manages the project, is majority owned by Shell. But a subsidiary of Japan’s Mitsui & Co. Ltd. (MITSY) holds a 25% stake and Diamond Gas Sakhalin, a subsidiary of Japan’s Mitsubishi Corp. (8058.TO), holds 20%.

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