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Reuters: Gazprom says the figure of 20% was a mistake (*100% perhaps?)

By Ikuko Kao

TOKYO, Sept 20 (Reuters) – Royal Dutch Shell’s $20 billion oil and gas project in Russia’s far east will progress more swiftly if Gazprom joins, Russia’s ambassador to Japan said on Wednesday, underscoring Moscow’s desire for a bigger role.

Shell-led (RDSa.L: Quote, Profile, Research) Sakhalin-2 is due to begin shipping large volumes of natural gas to Japan in two years. But the project faces uncertainty after Russia revoked environmental approval on Monday in a move seen by many as the Kremlin’s latest effort to wrest more control over energy resources.

Russia’s Ambassador to Japan, Alexander Losyukov, speaking via a translator, told reporters that Gazprom (GAZP.MM: Quote, Profile, Research) was a state-run company and if a state-run company joined the project it may be able to operate earlier.

He did not give any time frame for a possible start-up, but said that talks over Gazprom’s involvement — which the world’s biggest gas company said had stalled over the past several months — were expected to conclude by the end of the year.

Addressing Tokyo’s warning that a delay to the project may hurt political relations between the world’s second-largest oil producer and the third-biggest consumer, Losyukov also said Russia did not intend to stop the development.

But the environment could not be sacrificed, he said.

Japan’s prime minister-in-waiting Shinzo Abe said on Tuesday a major delay to Sakhalin could hurt diplomatic relations, while the European Commission called on Moscow to guarantee a secure and predictable investment climate.

On Monday, Russia revoked environmental approvals for Sakhalin-2 saying that Shell had violated their terms, the latest set-back for one of the world’s biggest energy projects, which has already seen costs double.

Shell denies the allegations.

Losyukov said about half of 60 environmental violations remained unresolved.

Separately Gazprom (GAZP.MM: Quote, Profile, Research) said on Tuesday that talks on a year-old deal to take 25 percent stake in Sakhalin-2 via an asset swap had stalled for months due to Shell’s cost overruns.

Losyukov gave a figure of 20 percent for Gazprom’s possible stake, although a Gazprom source said this was a mistake.

He reiterated that Russia would respect the production sharing agreement for Sakhalin-2 even though the 10-year-old PSA was not satisfactory in today’s market environment. The deal was signed when oil prices were far below today’s $60.

Shell has a 55 percent stake in the project, while Japan’s Mitsui & Co. Ltd. (8031.T: Quote, NEWS, Research) and Mitsubishi Corp. (8058.T: Quote, NEWS, Research) own a combined stake of 45 percent.

Sakhalin-2 will have a capacity of 9.6 million tonnes per year of liquefied natural gas (LNG) and is due to begin exports in 2008. At least half of its output has been earmarked for Japanese buyers, enough to meet about 6 percent of imports.

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