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MosNews: Gazprom Not Interested in Risks Associated with Shell’s Sakhalin-2 Project

Gazprom HQ

(Gazprom headquarters in Moscow / Photo from MosNews archive)

Created: 13.12.2006 09:46 MSK (GMT +3), Updated: 10:31 MSK

Russia’s state-controlled gas monopoly Gazprom is interested in joining Shell-led Sakhalin-2 oil and gas project in Russia’s Far East, but not at any price, the company’s chairman and Russia’s Deputy Prime Minister Dmitry Medvedev said on Tuesday, Dec. 12.

“Any business has its own price. Therefore, it is important to discuss the conditions of joining the company,” Medvedev said, quoted by RIA Novosti.

MosNews has reported that following months of intense pressure from Russia’s environmental oversight authorities and prosecutors, Royal Dutch/Shell, which currently owns 55 percent of the project, has decided to give up half of its holding in favor of Gazprom. The same is going to be done by Shell’s Japanese partners Mitsui and Mitsuibishi. This will give Gazprom as much as 50 percent in the world’s largest LNG project to date.

Medvedev said that the gas monopoly is currently considering the offer and all the ways of joining the project, including asset swap or direct investments.

Medvedev said the future business “should not be loss-making, should bring satisfaction to stockholders and should cause no environmental damage.”

Project operator Sakhalin Energy is accused of causing serious damage to Sakhalin Island’s ecology, including deforestation, toxic waste dumping and soil erosion. Russia’s environmental watchdog said Tuesday that court proceedings on compensation for environmental damage would most likely begin in March 2007.

Russia’s Industry and Energy Minister Viktor Khristenko also spoke about Gazprom’s participation in Sakhalin-2 on Tuesday. He said that the state-controlled giant will face the same requirements as other investors.

“If Gazprom joins other participants in the [Sakhalin-3] project, then it will have to follow all the obligations of the [production-sharing] agreement [signed in 1994], including the requirements of environmental protection legislation, just like all other investors” he said.

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