Sakhalin-2 project broke lot of rules, says Russia - Reuters

Sakhalin-2 project broke lot of rules, says Russia
05 Dec 2006 21:40:41 GMT
Source: Reuters

by David Ljunggren

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OTTAWA, Dec 5 (Reuters) - Royal Dutch Shell's <RDSa.L> $22 billion Sakhalin-2 oil
and gas project has broken a significant number of environmental regulations
"in barbaric fashion" and the company and its partners will have to pay a fine,
Russian Natural Resources Minister Yuri Trutnev said on Tuesday.

Trutnev said the process of working out the size of the fine should be ready by the
middle of 2007, adding that Moscow has no intention of revisiting the original
production-sharing agreement that Shell and its partners signed with Russia.

An increasingly confident Russia, boosted by high energy prices, is putting pressure
on the project over cost overruns and what it says are environmental violations,
as well as to secure a stake for state firm Gazprom <GAZP.MM>.

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"The comprehensive assessment has been finished and its conclusions do not differ
from our earlier comments on the situation ... it says that in the process of building
Sakhalin-2, a significant number of Russian laws protecting the environment were
broken," he told reporters in Ottawa.

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