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AFX News Limited: Shell Consortium Halts Construction of Sakhalin Pipeline

The Sakhalin Energy consortium, led by Royal Dutch Shell, said it has halted construction of an oil and gas pipeline on Sakhalin Island due to landslide risk affecting a stretch of seven kilometers of the route in the Makarov region.

Spokesman for the consortium Ivan Tcherniakhovski told Agence France-Presse that Sakhalin Energy believes certain sub-contractors have not adhered to technical instructions and standards.

Of the total 1,600 kilometers of pipeline to be laid, 1,410 are completed, and the latest delay is not expected to have an impact on the general timescale of the project, Tcherniakhovski added.

Royal Dutch Shell has a 50% stake in Sakhalin Energy, while the Japanese companies Mitsui and Mitsubishi hold 25% and 20%, respectively.

Russia’s natural resources ministry said earlier this month it wants to halt construction of the pipeline in the far east of the country because of the risk of landslide damage, and it proposed that the project be stopped while environmental experts assess surrounding areas at risk from landslides.

Copyright 2006 AFX News Limited. All Rights Reserved.

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