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Reuters: Shell emails raised Sakhalin project fears – paper

Mon Nov 6, 2006 6:37 AM GMT

LONDON (Reuters) – Royal Dutch Shell was warned four years ago by one of its own officials of safety concerns over the Sakhalin-2 oil and gas project in Russia, the Guardian reported on Monday, quoting what it said were emails from him.

The internal messages sent to Engel van Spronsen, then technical director of the Shell-led Sakhalin Energy firm, voiced concerns about the size of the wells, drilling in an earthquake area and the project’s tight schedule, the newspaper said.

Hans Bouman, asset manager for the NAM company, jointly owned by Shell (RDSa.L: Quote, Profile, Research) and Esso, sent one of the emails after a visit by Sakhalin Energy officials to see how NAM operated the Groningen field, it said.

“When they talked (with great enthusiasm!) about the well completions and other problems (earthquake area, young faults that have gas plumes, half a year no access to platform etc) and I saw the completion design, I started to worry,” Bouman wrote, according to the Guardian.

“Engel, several of us had the same feeling: this is not going too well. On some general questions why not this or that (eg sub sea templates like in Troll or Draugen) we heard: yes you are right but we are now schedule-driven,” he wrote.

A source close to Sakhalin Energy, however, dismissed the gravity of the revelations, the newspaper said. The source said the comments had been personal remarks made a long time ago about issues that had later been dealt with.

Russian officials have cracked down on two production sharing agreements (PSAs) on Sakhalin Island led by Shell and Exxon Mobil (XOM.N: Quote, Profile, Research), by threatening to withdraw ecological permits and delay production with technical checks.

Analysts have said Russia’s new-found enthusiasm for environmental and technical standards may mask a state-sponsored attempt to get more control of the PSAs.

Late last month, however, Russian Resources Minister Yuri Trutnev softened his rhetoric against the Shell-led project but repeated that the venture could be halted if its environmental record was not up to scratch.

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