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UpstreamOnline: Gref claims production sharing ‘outdated’

By Upstream staff

Russian Economy Minister German Gref said today production sharing deals were an outdated mechanism to attract foreign investment but added that all existing deals should be respected.

The move follows weeks of tensions between the government and Shell, which climaxed yesterday when the Resources Ministry revoked ecological approvals for the second, main phase of Shell’s Sakhalin 2 oil and gas project.

Gref also said the government was not ready to approve all cost overruns at the project after Shell sought government approval to double project costs to $20 billion.

“I don’t think they (changes to costs) have been worked out properly. They (Shell) have yet to take another look,” he told reporters.

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