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Reuters: Dutch won’t block Russian energy firms over Shell

MOSCOW, Oct 5 (Reuters) – The Netherlands will welcome the expansion of Russian energy firms in the country despite the problems Royal Dutch Shell (RDSa.L: Quote, Profile, Research) has encountered in Russia, the Dutch Economy Minister said on Thursday.

“It is true that on the investment climate you always look from a reciprocal point of view,” Joop Wijn told a news conference in Moscow.

But he added: “If Russia wants to sell gas to Great Britain and they want to transport gas to the Netherlands, we welcome this strategy.”

He was speaking after Russian gas export monopoly Gazprom (GAZP.MM: Quote, Profile, Research) and Dutch Gasunie agreed on a pipeline asset swap deal. “This positions the Netherlands as the central country in Europe for the transiting and storage of gas,” he said.

Wijn used his visit to Moscow to raise with the Russian government his concern over problems facing the Shell-led oil and gas project on Sakhalin island in the Pacific. The Sakhalin-2 scheme has come under pressure from Russian authorities since Shell announced last year that costs there would double to $20 billion.

The move angered Gazprom, which was hoping to swap a stake in a Siberian field against 25 percent in Sakhalin-2, a project that includes construction of the world’s largest gas liquefaction plant, which will supply Japan and the United States.

Russia’s environmental agency has threatened to halt the project and withdraw its ecological permits.

Many analysts have interpreted the pressure as a Kremlin strategy to squeeze foreigners out of the strategic energy sector or force them to cede bigger stakes to national companies on better terms.

Wijn said Russian officials told him the rule of law would prevail in the dispute. He said it would be in no one’s interest to delay the first shipment from the project, due in summer 2008.

GAS HUB

Russia is also piling pressure on the neighbouring Exxon Mobil-led (XOM.N: Quote, Profile, Research) Sakhalin-1 project as well as on BP’s (BP.L: Quote, Profile, Research) giant East Siberian Kovykta gas project, reviving concerns about the stability of Russia’s investment climate.

The chief executive of Italy’s ENI (ENI.MI: Quote, Profile, Research) Paolo Scaroni said this week that this had forced him to put off an asset swap deal with Gazprom.

On Thursday, Scaroni backtracked, saying talks on the deal were going well.

Wijn said he had told Russian officials that Shell’s problems were bad for the country’s investment climate, but played down the possibility that the Dutch government could block Gazprom’s expansion the Netherlands.

“The Dutch government will be always committed to development of gas infrastructure,” he said.

Gazprom agreed on Thursday to take a share in a Dutch pipeline to Britain while Dutch Gasunie will take 9 percent in Gazprom’s Baltic pipeline from Russia to Germany.

The swap will allow Gazprom to bypass possible British objections to its ambitious expansion plans while Gasunie will increase its access to Russian resources.

Gazprom’s expansion plans, such as a possible takeover bid for Britain’s Centrica (CNA.L: Quote, Profile, Research), have raised concerns in Europe after the gas monopoly briefly stopped supplies to Ukraine during a gas pricing dispute in January.

British media had reported that the British government might oppose a Gazprom bid for Centrica.

© Reuters 2006. All Rights Reserved

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