BBC: Gazprom grabs Sakhalin gas stake ~ From Shell.. ..for $7.5bn (£3.8bn) ....

BBC ^ | Thursday, 21 December 2006, 17:50 GMT | BBC Staff

[Ernest_at_the_Beach]

Gazprom grabs Sakhalin gas stake

State-owned Russian energy giant Gazprom has wrested control of a massive oil and gas field from Anglo-Dutch rival Shell.

Gazprom will pay $7.5bn (£3.8bn) for a 50%-plus-one-share stake in the Sakhalin-2 project after Shell was accused of breaking environmental laws.

The deal was signed by President Vladimir Putin and top executives from Royal Dutch Shell and Gazprom.

Analysts said the deal was better than expected for Shell.

Shell and Japanese companies Mitsui and Mitsubishi will see their stakes in the $22bn project on the Pacific island halved.

Holdings cut

Shell will now be left with a 27.5% stake, after it had been widely expected to see its holding reduced to 25%.

"They (Shell) seem to be receiving cash upfront which is positive and the purchase price is a little better than expected. Gazprom is effectively paying cost," said MAN Securities oil analyst Niell Morton.

However it still remains unclear whether Shell will continue to lead theSakhalin-2 project.

A statement from the firm said it would "continue to significantly contribute to the (consortium's) management and remain as technical adviser".

Legal wrangle

In October, Russia's environment agency, RosProdNadzor, had asked for more time to investigate the project saying it differed significantly from the original plans.

The country's environmental minister later claimed it had broken five criminal laws.

Shell has always denied the claims, while some analysts said the way the Sakhalin issue had been handled was designed to strengthen the government's position in renegotiating the development of the field.

After the deal was signed, President Putin said he was "glad" the issue had been resolved.

"Issues of principal importance are already as good as settled, while approaches to their solution - coordinated," he added.

Due to be finished in 2008, Sakhalin-2 will be the largest integrated oil and gas field in the world.

[Ernest_at_the_Beach]

Do you have a ping list for energy issues....?

[Ernest_at_the_Beach]

Due to be finished in 2008, Sakhalin-2 will be the largest integrated oil and gas field in the world.

LNG coming from here?

[Dog Gone]

An LNG facility is definitely planned for the project. I don't know where the LNG will ultimately be delivered.

Probably primarily the US and Japan.

[monday]

"after Shell was accused of breaking environmental laws. "

This is what happens when you do business in Russia. The government accuses you of breaking laws and takes your company. They are almost as bad as Iran or Venezuela. Even so, Shell appears to have lucked out so far. It could have been far far worse. Putin could have thrown top Shell officials in Russia in prison.

Guess he doesn't want to frighten off all foreign investment, just any new foreign investment. Current operations will likely continue, albeit with the fear of Putin instilled in them.

[freedomfiter2]

Guess he doesn't want to frighten off all foreign investment, just any new foreign investment. Current operations will likely continue, albeit with the fear of Putin instilled in them.


I'm just waiting for China to start this game.

[Eric in the Ozarks]

No Rule of Law: take your chances.

[SierraWasp]

I'll bet that lawyer on Sakhalin Island that I worked on my Ham Radio, back in the late 1970's, is a rich ol boy by now!!!

I used to try to get him to break the Soviet Union's "Prime Directive" not to talk religion or politics! I would tease and goad him every chance I got. I know it wasn't very nice, but hey! Communism wasn't very nice neither!!!

[Ernest_at_the_Beach]

Sakhalin Island,....,had a lawyer.

....Who knew....I thought it was a primitive place....

[redgolum]

It probably won't be that long.

[SierraWasp]

"The country's environmental minister later claimed it had broken five criminal laws."

GASP!!! OMG!!! HOW CAN THIS BE???

MAYBE FIRE AND BRIMSTONE WILL RAIN DOWN UPON THEM!!!

THEY ARE THE SCOURGE OF THE UNIVERSE!!! (/sarcasm)

See? I tole you guys them Enviros are a religious sect! Right there in that quoted sentence is the proof positive!!! They even got their own "ministers!!!" (where's my separation of church and state tagline?)

[freedomfiter2]

Maybe we should start a fund to help all those ship jumping corporations. Never mind, they made their money building up our enemies.

[rmlew]

The USSR basically stole the island from Japan and ethnically cleansed it. So stealing the gas fields is no problem for them.

[RusIvan]

The USSR basically stole the island from Japan and ethnically cleansed it.==

Yeah? How so? Japan occipied the south part of Sakhalin after her win in Russo-japanese war in 1905 but 1945 Stalin kicked them out. SO thier possession of the south half of Sakhalin was not long about 40 years. Anyways the north part of Sakhalin is where those oil and gas fields.

[thackney]

Do you have a ping list for energy issues....?

Nope, I've avoided creating a ping list. I make a habit of adding energy to the keywords of energy threads. Anyone looking for energy topics can search there. I'm back into a rather busy schedule and my posting is showing it. Thanks for thinking of me however. My company is working in Sakhalin and another large oil project.

[rmlew]

Yeah? How so? Japan occipied the south part of Sakhalin after her win in Russo-japanese war in 1905 but 1945 Stalin kicked them out. SO thier possession of the south half of Sakhalin was not long about 40 years. Anyways the north part of Sakhalin is where those oil and gas fields.

Strictly speaking, Skhalin and the Kuriles belong to the Ainu people. However, there were Japanese settlements on the island in the 17th century. In the 19th century Russians tried to conquer the whole Island. It was partitioned in 1867. Then Japan captured in in 1905.

[Tailgunner Joe]

Russia can teach the eco-freaks in the US a thing or two about using environmentalism as a tool to shake down corporations. Putin's watermelon Russia: Green on the Outside, Red on the inside.

[SierraWasp]

You said it, Joe!