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UPI Energy Watch: Shell's delays cost it $130M

Posted Saturday 7 January 2006
UPI Energy Correspondent
Shell's delays cost it $130M
Shell recently paid Iran $130 million in compensation for project delays in development and repair costs at the Sorush and Noruz oil fields, according to local reports.
Damages resulted from Shell's delays in developing the projects, Project Manager Mehdi Atrianfar was quoted as saying Sunday. He said costs are expected to increase further.
Shell had recurring delays during the project's implementation.
The British-Dutch venture also admitted last summer that its cost overruns at its liquefied natural gas project in Eastern Siberia at Sakhalin-2 doubled to $20 billion, with construction delays. Shell blamed increased project costs and the time delay due to the need to cover the rising price of raw materials, especially metals, higher contractor prices and the ruble's strengthening against the dollar.
Shell faced project delays in a number of other projects this year, including its Nigerian LNG project where cost overruns could reach over $1 billion.
Serious cost overruns may have led Shell to be excluded from a few multi-billion dollar projects.
Industry experts told United Press International during the unveiling of shortlist for the giant Gazprom gas field Shtokman that Gazprom's decision not to include Shell might have been attributed to the difficulties Shell encountered in implementing the Sakhalin-2 project.
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