GIVE me the man,” ran an old KGB adage, “and I will find you the crime.” A similar rule now seems to apply to energy companies in Russia. For Yukos, once Russia’s top oil firm, the crime was allegedly unpaid taxes; with the giant oil and gas project led by Royal Dutch Shell on Sakhalin island, in the Russian far east, it was environmental violations. In both cases the outcome was broadly similar: state-controlled firms ended up taking control of prize assets.
The huge Shell-led project known as Sakhalin II would be unusual anywhere, and in Russia it is unique. It involves the country’s first liquefied natural gas (LNG) plant, which will serve lucrative new markets in North America, South Korea and Japan. Sakhalin II is almost finished: it is already producing oil, and LNG shipments are supposed to begin in 2008.