Russia’s Move to Cancel Shell’s Sakhalin License Sparks Concerns

On Monday, Sept. 18, Russia’s Natural Resources Ministry said that it had decided to annul the approval of Sakhalin-2 oil and gas project in the Far East. This is the latest in a series of problems, encountered by the project run by Royal Dutch/Shell.

The difficulties put in jeopardy contracts with Japan, South Korea and the United States on supplies of liquefied natural gas, which are due to go into effect in 2008. Shinzo Abe, who has been widely tipped to become Japan’s next Prime Minister at Liberal Democratic Party elections Wednesday, Sept. 20, said relations between Russia and Japan may be hurt if there are any long delays in the project.
Some analysts interpreted the environmental watchdog’s decision to be a form of pressure on the British-Dutch group to conclude a deal with Gazprom. They said the Russian energy giant stands to gain a 25 percent plus one share in the Sakhalin project in return for a 50 percent stake in the massive West Siberian Zapolyarnoye-Neocomian project.
MosNews