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The Japan Times: Russia’s halt of Sakhalin-2 oil project decried

Thursday, Sept. 28, 2006
YUZHNO-SAKHALINSK, Russia (Kyodo) Ambassador to Russia Yasuo Saito on Wednesday criticized the order by the Russian Ministry of Natural Resources to suspend part of the Sakhalin-2 oil and natural gas development project as “lacking transparency.”

But Valery Garipov, chairman of the Subcommittee for Development of Oil Industry at the Chamber of Commerce and Industry of the Russian Federation, spoke on behalf of Russian interests, saying Russia’s state-owned Gazprom should be allowed to take part in the project, which is currently being conducted by non-Russian firms.

The exchange came at a two-day international conference on Sakhalin oil and natural gas that kicked off Wednesday in the capital of Sakhalin Province, with participants paying keen attention to how Moscow will explain its recent partial suspension of the Sakhalin-2 project.

Saito reiterated his stance, saying, “A unilateral order to put the project on hold, which is not accompanied by sufficient reasoning, deserves to be criticized as not transparent.”

While warning that the incident might negatively affect foreign investment in Russia, Saito added, “Both the Russian authorities and the companies in charge of the Sakhalin-2 project should negotiate to sort out their differences.”

The Russian ministry on Sept. 18 revoked an environmental permit for the project being promoted by Sakhalin Energy Investment Co., a joint venture set up by the Royal Dutch/Shell group of Britain and the Netherlands as well as trading houses Mitsui & Co. and Mitsubishi Corp.

If the Sakhalin-2 project is aborted, it could deal a major blow to energy import plans by Japanese utilities. LNG shipments have been expected to begin by 2008 and firms including Tokyo Gas Co. have signed long-term LNG purchase contracts with Sakhalin Energy.

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