Shell-Led Sakhalin Project To Go Ahead

Russian authorities stressed Sept. 20 that work on the vast Sakhalin-2 oil and gas fields should continue, in an apparent softening of Moscow's stance after criticism from Japan and Europe. "I don't see any reason to stop work on the project before the end of the technical economic assessment," Russia's Deputy Economy Minister Kirill Androsov was quoted as saying by Russian news agencies.

"As we haven't been served any official notice, the construction continues as planned," said the consortium spokesman, Ivan Chernyakhovsky. Officials said checks needed to obtain a new permit could take six months or more.

On Sept. 18 the Russian government revoked an environmental permit for the Sakhalin-2 project signaling that work should be halted. The move had provoked a sharp response from Japan, where the country's next prime minister Shinzo Abe told reporters that delays "can have negative effects on Russia-Japan ties in general."

Japan, which is almost entirely dependent on energy imports, had pinned its hopes on oil and gas from Sakhalin to help diversify supplies away from the Middle East. First deliveries from the Sakhalin-2 project were expected in 2008 and delivery contracts have already been signed with a series of Japanese energy companies.

British officials also expressed concern over the move and EU Energy Commission Andris Piebalgs called on Russia to outline the reasons for withdrawing the environmental permit. "I believe that they should be clearly and unequivocally identified by the Russian authorities and Shell must be given an appropriate time to resolve them," Piebalgs said Sept. 19.

Shell owns a 55% stake in the project, and Japanese firms Mitsui and Co and Mitsubishi Corp hold the remainder.

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