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AP Worldstream: Report: Shell makes new offer to OAO Gazprom on Sakhalin-2 energy project

Published: Dec 11, 2006

Royal Dutch Shell PLC has made a new offer to OAO Gazprom on terms for the state-controlled Russian natural gas giant joining a Shell-controlled energy project off the Pacific island of Sakhalin, a Russian news agency reported Monday.

Gazprom spokesman Sergei Kupriyanov was quoted by Interfax as saying that Shell Chief Executive Jeroen van der Veer made “a number of proposals” to Gazprom CEO Alexei Miller about the massive liquefied natural gas project at a meeting Friday, but he gave no details.

“We are thinking about them, given that there continues to be a number of objective problems at the project, including ecological problems,” he was quoted as saying.

Russian regulators have steadily turned up the pressure on the Shell-run development; last week water protection authorities suspended the licenses of a subcontractor.

Observers contend that the pressure is aimed at securing more favorable terms for Gazprom to join the project. Shell enraged the Kremlin last year when it announced that the cost of the project would double to US$22 billion.

Much of the liquefied gas from Sakhalin-2 is destined for Japan, which is seeking to reduce its dependence on the Middle East for energy. Japanese companies Mitsui & Co. and Mitsubishi Corp., hold 25 percent and 20 percent stakes, respectively, in the project.

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