ANOTHER? CONFLICTING REPORTS

Deal...

Gazprom’s Medvedev: Sakhalin-2 Deal with Shell ‘Close’
December 12, 2006 (Deutsche Presse-Agentur via Rigzone)

- Russian gas monopoly Gazprom is close to a deal with Royal Dutch Shell to allow the state-owned natural gas giant to enter the Sakhalin-2 oil and gas venture, Gazprom board chairman Dmitry Medvedev said…
- Sakhalin-2 has come under fire from Russian ecological officials, who on Tuesday said it had caused a preliminary US$10 billion dollars in environmental damage. Medvedev's announcement and the damage bill came amid media reports Netherlands-based Shell had offered Gazprom, which has made clear its interest in entering the project, control over the US$20-billion Sakhalin-2 venture…

- A Shell representatives told Deutsche Presse-Agentur dpa Tuesday that talks were ongoing and had been "constructive and positive."
- Russia's largest energy project is currently 55-percent owned by Netherlands-based Shell, and 25 and 20-percent, respectively, by Japan's Mitsui and Mitsubishi. Shell 100-percent subsidiary Sakhalin Energy is the project's operator…
- Many observers have called the environmental citations, which have hounded the project throughout the fall, a means to improve Gazprom's bargaining position.
Gazprom, the world's third-largest energy firm, has made aggressive inroads in recent months into all areas of power creation, with officials saying it could become the biggest company on earth…

- Shell signed a so-called production-sharing agreement (PSA) with Russia in 1994, allowing the firm to develop an estimated 500 billion cubic meters of gas and 150 million tons of oil reserves around Sakhalin. Under the terms of the PSA, Russia would begin to collect a share from sales only after Shell recouped its construction costs [which]…have since ballooned to US$20 billion, from earlier estimates of US$10 billion--keeping Moscow from accessing oil and gas revenues…

…Or no deal?

Russia Seizes Control Of $20 Billion Gas Project, Forces Shell Out
December 12, 2006 (African News Dimension)
- Shell is being forced by the Russian government to hand over its controlling stake in the world's biggest liquefied gas project, provoking fresh fears about the Kremlin's willingness to use the country's growing strength in natural resources as a political weapon. After months of relentless pressure from Moscow, the Anglo-Dutch company has to cut its stake in the $20 billion Sakhalin-2 scheme in the far east of Russia in favor of the state-owned energy group Gazprom…
- Russian authorities are also threatening BP over alleged environmental violations on a Siberian field in what is seen as a wider attempt to seize back assets handed over to foreign companies when energy prices were low.
- The moves will alarm many investors…
- [T]he news will also increase government ministers' concerns about Britain's energy security.