BBC Monitoring Service: Russian daily links diplomatic row with tighter monitoring of UK oil firms: Gazprom may demand compensation from Shell

EXTRACT: In addition, at Rosprirodnadzor’s demand, work on the construction of the oil pipeline under the Sakhalin-2 project was suspended yesterday for two weeks. The natural resources protection department accused the project operators – Sakhalin Energy – of allowing an error to occur in the layout of the drainage system along one sector.  Apart from that the company was caught laying pipes other than those specified under the project. Formally, this is damaging to Gazprom, which has a controlling stake in the project. However, given that a large part of the stake was acquired several months ago from UK’s Shell company, which retained 27.5 per cent in Sakhalin-2 as a result, the question arises whether Gazprom will demand some measure of compensation from the British side for the blunders that were made. Gazprom’s press office declined yesterday to comment to Nezavisimaya Gazeta on the situation, stating that it was Sakhalin Energy’s problem. 

Published: Jul 29, 2007

Report by Igor Naumov: “Rosprirodnadzor Unleashes Hunt for Brits. Action by Federal Service for Oversight of the Use of Nature Coincides With ‘Litvinenko Affair’ Escalation”. Text of report by Russian newspaper Nezavisimaya Gazeta on 27 July

The cooling down in Russian-British relations due to Moscow’s refusal to extradite to London entrepreneur Andrey Lugovoy, who stands accused of murdering Aleksandr Litvinenko, coincides with the lodging of claims by Rosprirodnadzor [the Federal Service for Oversight of the Use of Nature] simultaneously against a whole series of British companies operating in Russia. Experts are linking the natural-resources department’s action directly with the diplomatic row between the two countries and do not rule out the possibility of further escalation of measures directed against one another’s economic interests.

Yesterday [ 26 July] Oleg Mitvol, the deputy head of the Federal Service for Oversight of the Use of Nature, accused the British company Highland Gold Mining (HGM), which is engaged in developing the Mayskiy gold ore deposit on Chukotka (Mayskoye Limited Liability Company), of illegally exporting geological information out of Russia. It became known simultaneously that Rosprirodnadzor has embarked on checking out foreign-backed oil and gas companies operating in Russia and trading on the London Stock Exchange. A cursory glance at the list of companies under scrutiny reveals a large number of structures with British backing. In particular, checks are being run on the TNK-BP Holding Company subsidiary Chumpassneftedobycha Limited Liability Company, the UK Timan Oil and Gas Company’s subsidiary enterprises Neftegazpromtekh Limited Liability Company and Geotermneftegaz Open Joint-Stock Company, the UK Urals Energy company’s subsidiary Verkhneomrinskaya neft Limited Liability Company, and also Yuzhgazenerdzhi Limited Liability Company, which has just been acquired by UK company JKX Oil and Gas.

In addition, at Rosprirodnadzor’s demand, work on the construction of the oil pipeline under the Sakhalin-2 project was suspended yesterday for two weeks. The natural resources protection department accused the project operators – Sakhalin Energy – of allowing an error to occur in the layout of the drainage system along one sector.

Apart from that, the company was caught laying pipes other than those specified under the project. Formally, this is damaging to Gazprom, which has a controlling stake in the project. However, given that a large part of the stake was acquired several months ago from UK’s Shell company, which retained 27.5 per cent in Sakhalin-2 as a result, the question arises whether Gazprom will demand some measure of compensation from the British side for the blunders that were made. Gazprom’s press office declined yesterday to comment to Nezavisimaya Gazeta on the situation, stating that it was Sakhalin Energy’s problem.

Rosprirodnadzor, in turn, has not explained whether the increased level of attention to British companies is connected with the cooling of relations between the countries. Natalya Spivak, the deputy head of the Rosprirodnadzor department for oversight of the use of mineral resources, stated to your Nezavisimaya Gazeta correspondent on the telephone: “No comment on any issue,” and hung up.

However, Leonid Shats, a senior expert at 2K Audit-Business Consultations independent consulting group, denies a direct link between the political tension in Russian-British relations and the difficulties being experienced by British companies in Russia. The claims arose before the downturn in the diplomatic arena. “Timewise, only HGM can be described as a victim of this row, as the first checks on it date back to the beginning of June,” Leonid Shats recalled. He is certain that British business will suffer more as a result of what is occurring.

RUIE [Russian Union of Industrialists and Entrepreneurs] President Aleksandr Shokhin has a somewhat different take on events. In his comments to Nezavisimaya Gazeta he did not rule out the possibility that British companies in Russia and Russian companies in Great Britain may end up at the centre of increased attention from the monitoring agencies. “This is the continuation of the exchange of diplomatic blows. The next step that the business community will find unpalatable will be increased attention from the oversight and inspection agencies,” Aleksandr Shokhin stressed. It is his assessment that other European Union countries may eventually be drawn into this bilateral wrangle, and that they will take Great Britain’s side.

Source: Nezavisimaya Gazeta, Moscow, in Russian 27 Jul 07

BBC Monitoring