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Reuters: Russian minister calms energy policy worries: agencies

Wed Sep 27, 2006 2:05 AM ET

MOSCOW (Reuters) – Russian Foreign Minister Sergei Lavrov sought to alleviate Western concerns over Russian energy deals on Wednesday, saying talk of revising production sharing deals or pushing foreigners out of the sector was unfounded, Russian news agencies reported.

A recent barrage of threats from Russian officials to withdraw an ecological permit for the Shell-led Sakhalin-2 oil and gas project have sparked fears that Russia wants to renegotiate the production sharing agreement (PSA).

“Assertions about ‘revisions’ of PSAs and especially about squeezing foreigners out of the Russian energy sector have absolutely no basis whatsoever,” RIA news agency quoted Lavrov as telling a conference on Russia’s Pacific Sakhalin Island.

“Carrying out checks in no way means that licenses for developing deposits within the Sakhalin-2 project will be withdrawn,” RIA news agency quoted Lavrov as saying.

On Tuesday, Natural Resources Minister Yuri Trutnev said work on the Royal Dutch Shell-led Sakhalin-2 project could continue while a full-scale ecological probe, due to start on October 25 and last a month, is held.

Shell was not immediately available for comment.

Shell has come under fire from Russia after admitting the project would cost $20 billion, twice as much as it originally estimated, complicating talks on a strategic swap of assets with state-controlled gas monopoly Gazprom .

The doubling of Shell’s costs has also infuriated Gazprom, which wants to take an equity stake in Sakhalin-2. The project will supply liquefied natural gas to export markets such as Japan and Korea.

Concerns were also raised about the neighboring Sakhalin-1 PSA project run by Exxon Mobil , after industry sources said oil pipeline loading had been suspended for technical checks.

Exxon Neftegaz, a group uniting Exxon and its partners in Sakhalin-1, has said it was unaware of any order to suspend work and business is continuing as usual.

The head of Russia’s technical standards agency RosTekhNadzor told the Sakhalin conference that he hoped Sakhalin-1 would be able to deal with any breaches of the rules at its De Kastri terminal before its planned launch on October1, RIA reported.

The head of Exxon Neftegaz Steven Terni said the issue needed to be sorted out, but that the scheduled launch of the terminal was possible.
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