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MarketWatch: Shell’s Sakhalin costs could reach $28 billion

Last Update: 6:55 PM ET Oct 22, 2006

LONDON (MarketWatch) — Costs for Royal Dutch Shell PLC’s (RDSA) liquefied natural gas project Sakhalin-2 could spiral to $28 billion, the Observer reports Sunday.

The predicted construction budget for Sakhalin-2 has risen to $20 billion from $15 billion in 2003, the report says, citing a leaked report by the Russian government.

The report by the Russian Ministry of Natural Resources could limit the revenue Russia will receive from Shell under the production-sharing agreement signed a decade ago.

Sakhalin-2 has been the focus of a struggle between Shell and state-controlled Russian energy giant OAO Gazprom (GSBEX.RS).

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