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theage (Australia): Russian squeeze on Shell sparks UK response

Blair Putin face off

Wednesday 27 September 2006

THE British Government has raised concerns with Russian President Vladimir Putin over last week’s withdrawal of Shell’s permit to develop the £10 billion ($A25 billion) Sakhalin-2 energy project, suggesting the move could spark a diplomatic row.

Approval by the Russian Natural Resources Ministry for Shell’s liquefied natural gas project on Sakhalin Island, in the far east of Russia, was abruptly withdrawn last week on environmental grounds.

A spokesman for the British Prime Minister’s office said on Monday that “the Government is raising its concerns about the decision with the Russian Government. Downing Street is following this very closely”.

The US State Department is also concerned.

The move, to halt work on the world’s largest LNG project, was widely interpreted as Russia trying to wrest back control of its natural resources from Western oil companies.

It sparked harsh words from the European Commission and the Japanese Government.

The authorities also targeted the US oil group Exxon Mobil, which runs Sakhalin-1 on the island, late last week, saying they would not allow it to expand the project.

Campaigners from the Bankwatch group, a network of environmental groups in 11 countries, say Russia was right to stop environmental and other abuses at Sakhalin, which had been going on for too long.

Fears have been expressed for the Pacific grey whale that inhabits the waters around Sakhalin.

Bankwatch also argues that Shell should receive no funding from the European Bank for Reconstruction and Development, on the grounds that it is breaking bank rules by presiding over rising levels of crime and HIV on Sakhalin.

Greig Aitken, of Bankwatch, said: “Russian and international environmental organisations have, for several years, documented the same pattern of violations cited by the Russian Government, as well as a range of others that all have a grim bearing on an island that depends on fishing for one-third of its economy.

“If there is talk of Russia asset-grabbing as it carries out its right to, belatedly, defend its environment, it should not overshadow the asset-grabbing Shell is attempting in the form of billions of dollars of international taxpayers’ money for a project it has been unable to get right for the last three years,” he said. A report issued by Bankwatch this week said there were mounting problems on Sakhalin with construction workers who had arrived to work for Shell. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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