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MarketWatch: Shell to meet Russian energy minister on Sakhalin project

Last Update: 6:58 PM ET Dec 7, 2006
By Ian Talley

WASHINGTON (MarketWatch) — Royal Dutch Shell (RDSA.LN) executives will meet next week with Russia’s energy minister to try to resolve an ongoing dispute over its Sakhalin-2 oil and gas project, a Russian presidential economic adviser said Thursday.

Led by Shell, the Sakhalin Energy consortium developing Sakhalin-2 has been hit by a steady flow of accusations from Russian officials threatening to stop work at the project, prosecute the company and hit the consortium with a range of economic sanctions.

Igor Shuvalov, an economic adviser to Russian President Vladimir Putin, said he had recently spoken to several Shell officials, “and they look at the case positively.”

Shell executives will meet with the Russian energy minister next week in Moscow, he said, “and I hope that they will settle the issue.”

Earlier Thursday, the Russian Natural Resources Ministry said it had suspended 12 licenses for the use of water resources from a subcontractor for the consortium that is developing the Sakhalin-2 oil and gas project. On Wednesday, local prosecutors said they had found more than 100 violations of environmental, labor and other regulations.

Many observers believe the regulatory campaign is part of an attempt by the Russian government to improve the terms of oil and gas deals it struck with foreign energy companies in years past.

A Shell spokesman declined to comment, but the company’s chief executive said at its third-quarter earnings conference in late October that the company hoped to be able to resolve the “misunderstanding” through discussions with Russian authorities.

A top official at the Russian Natural Resources Ministry’s environmental watchdog has threatened to pull the consortium’s environmental license.

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