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Reuters: Russia hits Shell JV with back-tax claim-paper

Friday October 20, 1:29 PM

MOSCOW, Oct 20 (Reuters) – Royal Dutch Shell’s joint venture with Russian oil firm Sibir Energy, Salym Petroleum Development, has been hit with a back-tax claim of more than $10 million, the Vedomosti business daily said Friday.

Vedomosti quoted a source close to the company as saying the back-tax claim was for the 2002-2004 period and that the venture — one of the largest onshore energy projects in Russia — was disputing the claim, while a Russian tax official confirmed to the paper that the claim existed.

Officials at Shell , Salym Petroleum Development and the Russian tax inspectorate were not immediately available for comment.

Shell is under pressure in Russia over its giant Sakhalin-2 offshore oil and gas project where it has a 55 percent stake, and which also includes Japan’s Mitsui and Mitsubishi .

Salym Petroleum Development operates the Salym Group of fields — West Salym, Vadelyp and Upper Salym — in the Khanty-Mansiysk District in Western Siberia.

It is a 50-50 joint venture operated by Shell and Sibir Energy’s small production firm Magma.

The Salym JV, which started producing commercially last November, is expected to be producing at least 165,000 barrels per day by the end of the decade.

The Shell-led Sakhalin-2 has come under pressure over ecological and technical compliance from Russia’s environmental agency. Analysts say the claims are part of a broader Kremlin strategy to gain control over the lucrative project.

Russian Resources Minister Yuri Trutnev, who will inspect Sakhalin-2 next week, has said Russia was upset by the doubling of costs at the project to $20 billion, which delays the moment when the country gets its profit from the production sharing deal.

Russia’s upper house of parliament, the Federation Council, is expected to call for government action on the troubled Sakhalin-2 project at a meeting later on Friday.

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