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International Herald Tribune: Russian minister: Decision on license for Shell-led Sakhalin project to be made within 1 month

The Associated Press
Published: September 26, 2006
 
MOSCOW Russian authorities will try to avoid shutting down a Shell-led liquefied gas project off the far eastern island of Sakhalin, the natural resources minister said Tuesday.
 
But Yuri Trutnev warned that the project was riddled with serious environmental violations that need to be addressed so that it may continue.
 
A final decision on whether to withdraw a key license at the Sakhalin-2 will be made by the ministry within one month after experts from a state environmental safety watchdog complete their audit of the project, he said. The auditors headed to the region Tuesday.
 
“We must to everything possible to resolve this situation without stopping the project,” Trutnev said at a news conference. He added, however, that if environmental concerns aren’t properly addressed, the project will have to stop.
 
Trutnev’s ministry said last week that it would revoke the permit at Sakhalin-2 which is being developed by Sakhlain Energy, a consortium led by Shell.
 
Plans to revoke its environmental permit would freeze work for 17 months and lead to 15,000 lost jobs, said Igor Ignatyev, Sakhalin Energy’s vice president for corporate affairs.
 
“If it is signed, it will have irreversible effects,” Ignatyev said on Ekho Moskvy radio. “I have the sense that the people who take these steps don’t know what the legal consequences of this might be.”
 
Ignatyev said the decision, if confirmed, would lead to mass layoffs and would see 3,500 permits and licenses annulled. “It’s not the kind of exercise where you say ‘no today I canceled it, tomorrow I’ll sign it again.’ The consequences are very serious and irrevocable.”
 
Analysts have suggested the ministry’s move is a bargaining tool aimed at securing more favorable conditions for state gas monopoly Gazprom, which is in negotiations to join the project.
 
Ignatyev did not comment directly on that issue, but noted “there are a lot of coincidences.”
 
There has been pressure on a number of foreign-controlled energy projects that observers say is an attempt to secure a bigger role for Russian companies.

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