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The Moscow Times: Shell Gets Claim for Back Taxes

Monday, October 23, 2006. Issue 3524. Page 7.

Authorities are investigating tax payments of a venture half-owned by Royal Dutch Shell, the oil firm said Friday, adding to the pressure it is facing in its Sakhalin-2 project.

Shell’s Salym Petroleum Development, or SPD, joint venture with Sibir Energy said it had received a back tax claim that it was disputing.

“Tax authorities conducted a planned tax check at the SPD branch in Nefteyugansk in the summer. They discovered some violations for 2002 to 2004. We do not agree with the claims and have filed a suit with the Nefteyugansk arbitration court,” said Yelena Zakupneva, external affairs manager at SPD.

“We did nothing wrong and hope to win the case,” she said.

Zakupneva declined to say how much the demand was for, but Vedomosti put the figure at more than $10 million.

The venture operates three fields in the Khanty-Mansiysk region of western Siberia and started producing commercially last November. It is expected to be producing at least 165,000 barrels per day by the end of the decade.

The back tax claims follow months of inspections of the Sakhalin-2 oil and gas project off the Pacific coast, which is led by Shell.

With a total investment budget of $1.3 billion, SPD is one of the largest onshore energy projects in Russia, but Sakhalin-2 is far bigger.

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