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AFX News Limited: Shell-led Sakhalin Energy faces legal action in Russia UPDATE

11.14.2006
 
(Adds reaction from Sakhalin Energy)

MOSCOW/LONDON (AFX) – Russia is considering legal action against Royal Dutch Shell PLC-led Sakhalin Energy Ltd over environmental breaches at the 20 bln usd Sakhalin-2 gas project.

Oleg Mitvol, deputy head of Russia’s environmental monitoring agency RosPrirodNadzor, said the government could seek damages of about 15 bln usd.

‘We are examining our position with US lawyers and I think that in two weeks we will have a document from New York that we will send to the Russian government,’ Mitvol told reporters in Moscow.

Shell holds a 55 pct stake in the project, while Japanese partners Mitsui & Co Ltd and Mitsubishi Corp own 25 pct and 20 pct, respectively.

Sakhalin Energy, in a statement, said it was disappointed with the ‘unsubstantiated’ criticisms made by RosPrirodNadzor on the project.

It insisted that the ecological impact of the project was ‘short-term and reversible.’

It also rejected suggestions that the information regarding environmental break was ‘knowingly withheld (by the company) from regulators or shareholders.’

Sakhalin Energy stressed that it takes ‘very seriously’ the inspections carried out by RosPrirodNadzor and other regulatory bodies.

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