By GUY CHAZAN in Moscow and CHIP CUMMINS in London
December 12, 2006; Page A3
The Russian government may be close to a victory in a long-running dispute with Royal Dutch Shell PLC over a $20 billion energy project, a development that would bolster Kremlin control of the nation’s vast oil and natural-gas reserves in a time of concern over world supplies.
Shell has proposed ceding a controlling stake in the Sakhalin-2 project in Russia’s far east to state-run OAO Gazprom, an official close to the situation said. Another person close to the talks stressed they are continuing and an agreement hasn’t been reached. Such a move would underscore the Kremlin’s opposition to foreign control of large energy projects in Russia at a time when an increasingly confident Russian state, buoyed by high oil prices, is determined to restore its domination of the country’s oil and natural-gas industry.
Shell owns a 55% stake in Sakhalin-2, which has an expected total cost of $20 billion to develop. Russian regulators threatened to impose sanctions on the project following Shell’s announcement in 2005 of big cost overruns. That cast a pall over what is one of the biggest liquefied-natural-gas projects in the world and the single-biggest foreign investment in Russia. read more
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