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The Wall Street Journal: FUEL FOR POWER

FUEL FOR POWER: The European Bank for Reconstruction and Development’s likely move to abandon a loan to Sakhalin II after Royal Dutch Shell PLC and its two partners were forced to sell a 50% stake in the huge energy project in Russia’s far east to Russian natural-gas giant OAO Gazprom likely won’t jeopardize the $22 billion project. Furthermore, it likely won’t threaten overall funding for big Russian energy projects, as Western investors remain interested in Russia in general and its vast natural resources in particular.

But the bank’s potential change of heart underscores the dismay in the West over increasing state control in the Russian oil-and-gas industry and the Kremlin’s treatment of foreign investors, as Guy Chazan reports. The project is the biggest foreign investment in Russia. The bank, set up in 1991 by Western governments to support the private sector in former Communist states making the transition to a free market economy, had planned to lend Sakhalin II about $300 million.

Meanwhile, Moscow’s last-minute deal sharply raising the price of Russian natural gas to Belarus highlights the success of a Kremlin energy policy that the West has denounced as bordering on blackmail. By showing that it is willing to cut off countries that won’t accept rate increases, Russia has ended an era of cheap energy supplies to former Soviet republics, as Alan Cullison reports.

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