The Motley Fool: Playing the Russian Shell Game
“It’s better for a foreign investor to stay on the good side of the Russian government. Even if you’re within your rights in turning down a “deal,” being greedy about hanging on to too good of a thing can get you YUKOSed if you’re not careful.”
Posted Saturday 9 July 2005
By Rich Smith
Investors weren’t quite sure what to make of yesterday’s news involving Russia’s Gazprom and partner Royal Dutch (NYSE: RD)/Shell (NYSE: SC). As reported on CNNMoney, Royal Dutch/Shell has cashed in nearly half of its interest in the Sakhalin-2 liquefied natural gas project (located near the island of the same name) in exchange for a 50% stake in the lower stretch of a Siberian gas field known as Zapolyarnoye.
On hearing the news, investors sold off the shares of both Royal Dutch and Shell by about 1% apiece. In contrast, Gazprom’s shares, which trade over the counter, were bid up more than 4%. The negative, though muted, reaction to the news on the part of investors in the foreign oil companies is understandable. After all, Sakhalin-2 has progressed nicely since beginning production in 1999. It’s a proven find, the world’s largest liquefied natural gas (LNG) project, and likely to turn into an all-around winner for its participants (which in addition to the companies named include nearby Japan’s Mitsubishi and Mitsui (Nasdaq: MITSY)). In contrast, it’s not yet known how well the “Lower Zapo” field project will pan out. read more
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