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Reuters: Red tape holds up final Gazprom-Shell deal -sources

Tue Apr 17, 2007 12:20 PM BST

MOSCOW, April 17 (Reuters) – Only red tape is preventing Russia’s gas monopoly Gazprom and Royal Dutch Shell from completing their $7.45 billion Sakhalin-2 deal, which is virtually sealed, industry sources said on Tuesday.

“There are no outstanding issues between the parties but the deal has to follow certain procedural steps for completion,” said one industry source close to the deal.

The two firms and Shell’s two Japanese partners struck a preliminary deal in December for Gazprom to take a 50 percent stake in the huge energy project and hoped to complete the details in the first quarter of this year.

But the final talks, which industry sources had said would conclude on Monday with no material changes to the agreement reached in December, dragged on through Tuesday.

One source said the final agreement had been sent to the office of Prime Minister Mikhail Fradkov before getting bogged down in procedural questions.

Under the deal Gazprom will pay cash to Shell and its Japanese partners Mitsui and Mitsubishi, becoming the leader of the project.

The deal followed months of pressure on the project by Russian environmental authorities and was interpreted by analysts as yet another step in the Kremlin’s drive to win more control over Russia’s huge energy industry.

Shell and its Japanese partners will each dilute their stakes by half, leaving them with 27.5 percent, 12.5 percent and 10 percent, respectively.

© Reuters 2007. All rights reserved.  

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