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Daily Telegraph: Russian police raid watchdog

By Russell Hotten, Industry Editor (Filed: 19/10/2006)

The offices of the Russian government agency that cracked down on Royal Dutch Shell’s Sakhalin-2 development have been raided by criminal investigators. Members of the Interior Ministry’s organised crime department went unannounced to RosPrirodNadzor (RPN), the environment watchdog, yesterday and removed documents.

Russian officials said the raid was unrelated to the agency’s investigations into foreign firms operating at Sakhalin. But the news sparked speculation that it was part of the power-politics being played by Moscow over the Sakhalin venture.

Yevgeny Artyomov, a spokesman for the organised crime department, said the investigators were seeking documents for a case involving the Yuzhno-Tambeisk gas field in Siberia. An official told the Associated Press news agency that some of the documents related to business trips made by two of the agency’s employees.

RPN, part of the Ministry of Natural Resources, wanted Shell’s environmental permits for Sakhalin revoked, seen as part of a move by Moscow to force foreign firms to cede some control of the $20bn project.

Foreign government’s have made representations to Russia over Sakhalin and yesterday’s move may have been an attempt by the authorities to show they are even-handed when dealing with energy companies.

On Tuesday, Sakhalin prosecutors summoned the local head of RPN, Dmitry Belanovich, and asked him to supply a full list of inspectors’ names and information about their actions in October.

The Ministry of Natural Resources said in a statement that it acted after complaints about the wrongful actions of RPN in Sakhalin while carrying out supervisory and control checks.

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

Oleg Mitvol, the deputy head of RPN, was expected to present new complaints about Sakhalin-2 during a visit to the Far East by Yuri Trutnev, Russia’s Natural Resources Minister, next week.

But there are signs Shell and Moscow are inching towards a deal. After a meeting on Monday, Shell said that it had resolved all environmental concerns. Any resolution is likely to involve state gas group Gazprom taking a 20pc stake in Sakhalin-2 next year. Shell declined to comment.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/10/19/cnshell19.xml

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