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XFN-ASIA: Shell mulling legal options if unable to resolve Sakhalin issue – report

HONG KONG (XFN-ASIA) – Royal Dutch Shell PLC managers are mulling legal options if the company is unable to resolve the Sakhalin-2 project issue with Russian authorities by other means, the Wall Street Journal reported in its online edition, citing people familiar with the matter.

Last week, Russia’s ministry of natural resources pulled a key environmental permit for Shell-led consortium’s oil-and-gas project on Russia’s Sakhalin island.

Work on the project has not stopped, and Shell said it has not been formally notified that the permit has been cancelled.

Shell’s managers have struggled to create a dialogue with authorities on the matter, both in Moscow and Sakhalin Island, the Journal said, adding that the company is considering its legal options if it is unable to resolve the issue through other means.

‘All options are open,’ including legal ones, the paper cited a source familiar with Shell as saying. Other options include discussions with the Russian government or the use of diplomatic channels, after authorities in the UK and the European Union criticized the Russian move.

A spokesman for Sakhalin Energy Investment Co, the venture managing the project in which Shell owns 55 pct, declined to comment, saying ‘nothing has changed’ since earlier statements, the paper said.

A Shell spokeswoman was quoted as saying that she had ‘no knowledge’ about legal options being considered and that the company does not comment on private meetings.

Japan’s Mitsui and Co and Mitsubishi Corp hold 25 pct and 20 pct stakes respectively in the Sakhalin-2 project.

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