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Lloyds List: Shell seeks help for Sakhalin ‘bullying’

By: Martyn Wingrove, Lloyds List
Published: Sep 22, 2006

SHELL-led consortium Sakhalin Energy has the backing of the Japanese and British governments and the European Union over its tangle with Russian authorities.

The Russian government is putting pressure on Shell and partners Mitsui and Mitsubishi over the developments on the Sakhalin II concession in what many see as a bullying tactic to gain more state control.

The natural resources ministry is threatening to cancel Sakhalin Energy’s project permits due to environmental damage from the building of oil and gas pipelines across the island.

It has also started looking at other production sharing agreements it has signed with ExxonMobil and French group Total to find legal loopholes.

The Japanese government has voiced its concern over Moscow’s moves to stop the Sakhalin II project and said this would dent international relations.

Europe’s energy commissioner Andris Piebalgs has written to Russian energy minister Viktor Khristenko to seek a speedy resolution after Shell’s environmental permits were revoked.

A senior British Shell source said yesterday that his company had gone to the highest level in the British and Dutch governments to get support for its claims.

Shell is in negotiations to switch 25% of Sakhalin Energy to gas monopoly Gazprom, but talks slowed when cost estimates doubled to $20bn. Its Japanese partners are thought to be looking to sell 5% in the consortium to Gazprom.

The natural resources ministry is thinking of withdrawing ExxonMobil’s licences for the Sakhalin I project, which was due to start exporting oil this month, if the US major raises its cost estimates to $17bn.

Sergei Fyodorov said in an interview with government-run paper Rossisskaya Gazeta that rising costs on Sakhalin I and Total’s Kharyaga project in northwest Siberia could lead to these PSAs and permits being revoked. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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