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Financial Times: Moscow reassures Shell over Sakhalin

By Arkady Ostrovsky in Moscow
Published: September 26 2006 01:38 | Last updated: September 26 2006 01:38

Russia had no intention of removing an operating licence from Royal Dutch Shell for Sakhalin 2, the world’s largest energy project, its minister of natural resources said yesterday.

Yuri Trutnev confirmed his ministry was planning to conduct a fresh investigation of Shell’s compliance with environmental regulations, but had no power over the project’s economic aspects.

Shell, the operator of Sakhalin 2, came under fire from Russian authorities after more than doubling the projected cost of the oil and gas project. Such a move would affect Russia’s profit from the venture.

Mr Trutnev said: “The inspection should only examine whether the operator is abiding by environmental protection legislation, not the other aspects of resource use in Sakhalin region or offshore.”

He added: “There is no question of removing the licence because of the result of the investigation.”

Mr Trutnev’s statement offered a different view from that previously offered by the ministry of natural resources, which had threatened to cancel the environmental licence for the Shell-led project, thus disrupting its development.

The threat attracted a strong backlash from politicians around the world.

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