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The Wall Street Journal: DEAL OR EXILE

DEAL OR EXILE: Royal Dutch Shell PLC and its partners reached an agreement to pay a substantial annual dividend to the Russian government as part of a deal to salvage the $20 billion Sakhalin-2 project. The move demonstrates just how far major Western oil companies apparently must go to remain in the good graces of oil-producing countries such as Russia, as governments tighten control over natural resources.

The previously undisclosed agreement was part of a settlement that ended months of pressure from Russian regulators who had threatened to shut down Sakhalin-2, a huge oil and natural-gas project in Russia’s remote Far East. The pact essentially changes the terms of the Sakhalin-2 agreement, while avoiding the legal complexities that would be involved in formally revising the contract. In addition to ceding a controlling stake in their flagship Sakhalin-2 project to the Russian state gas company last week, they will pay to the Russian government from 2010 onward a so-called priority dividend that will be linked to the price of oil.

Meanwhile, an application this week by a former Kremlin reporter for political asylum in the U.K. underscores the rising pressure on journalists in Russia and could fuel tensions between Moscow and London. Elena Tregubova, whose 2003 book provided an intimate and often unflattering look at Russia’s ruling elite, including President Vladimir Putin, said she is seeking asylum because she fears for her life if she returns to Russia.

Read Guy Chazan’s report from Moscow on Shell’s concession:

http://online.wsj.com/article/SB117755246476982934.html

Read Alan Cullison’s report from Moscow on Elena Tregubova:

http://online.wsj.com/article/SB117752305660982257.html

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