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AP Worldstream: Russian minister: Total-controlled oil field in Russia has ‘violations many times over’

By: ALEX NICHOLSON,
Published: Oct 24, 2006

An Arctic oil field being developed by France’s Total SA has “violations many times over,” Russia’s natural resources minister said Tuesday.

But Yuri Trutnev, speaking after a conference of prosecutors’ agencies and environmental regulators, also signaled that Total was in no danger, at least not immediately, of losing licenses to develop the Kharyaga field in the Nenets region.

“Significant violations have come to light there, in particular connected with geological surveys, drilling and extracting. All these violations are violations many times over,” Trutnev told reporters in the Siberian oil town of Nefteyugansk.

“I hope that that the company will bring its work into line with the terms of its license,” he said.

Total has a 50 percent interest in Kharyaga and Norway’s Norsk Hydro ASA has 40 percent, while an oil company controlled by the regional government holds the rest.

The comments come amid growing fears that the Kremlin is seeking to reshape a handful of Western-controlled energy projects to its advantage.

Trutnev was later slated to fly out for the Pacific island of Sakhalin to inspect a liquefied natural gas project led by Royal Dutch Shell PLC that has come under increasing government scrutiny.

At the conference, Trutnev reiterated a warning that “mass and gross violations” environmental violations at the US$22 billion (A17.5 billion) Sakhalin-2 project could lead to its license being revoked.

He also lashed out at the work of environmental regulatory agencies for what he called their “inertia” and “absolute absence of coordination.”

“We want to be sure that what is happening on Sakhalin isn’t happening elsewhere,” he said.

A top federal prosecutor sounded the same criticism, saying regulatory agencies were more likely to issue warnings along with suggestions for correcting problems rather than open full-fledged criminal cases.

He said subsidiaries of Anglo-Russian oil company TNK-BP, along with several Russian companies were among the worst offenders.

“This sort of impunity is only encouraging violators,” Deputy Prosecutor General Alexander Buksman said.

Shell is due to present a final plan for rectifying the violations this week; Trutnev said Friday he had received a letter from the head of the consortium running Sakhalin-2 assuring him that the violations, which include illegal logging, water pollution and soil erosion, had been or would be addressed.

Analysts have suggested that the pressure from Trutnev’s ministry is aimed at re-shaping the deal which allows Shell to wait until the project is comfortably in the black before splitting profits with the state.

Copyright 2006 Associated Press

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