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Reuters: UPDATE 1-Shell awaits more Sakhalin environment claims

Tue Oct 17, 2006 10:15am ET

By Tanya Mosolova

MOSCOW, Oct 17 (Reuters) – Royal Dutch Shell (RDSa.L: Quote, Profile, Research) said on Tuesday that Russian officials may hit its $20 billion Sakhalin-2 oil and gas project with a slew of new environmental claims just as it resolves a list of existing complaints.

Chris Finlayson, head of Shell in Russia, said the company had dealt with 97 percent of the alleged breaches found by an environmental audit conducted in mid-September and hoped to have resolved all of them by the end of the week.

“We are confident that we see a way forward to resolve the issues,” Finlayson told Reuters.

But another audit is under way and its conclusions are likely to be presented during an inspection of Sakhalin-2 by Natural Resources Minister Yuri Trutnev on Oct. 24-26.

A Shell spokesman said this could lead to a new set of requirements. “We don’t know how many prescriptions we will get from the new audit. We don’t know what’s in it,” he said.

Russia has threatened Shell with the full armoury of sanctions at its disposal if it fails to address environmental violations at Sakhalin-2, the world’s biggest liquefied natural gas project and Russia’s top foreign investment.

Trutnev has said the concerns include deforestation and damage to the sea around the Pacific island of Sakhalin, as well as sand clogging river beds and the potential for pipeline damage in an area prone to mudslides.

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