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EU concerned at Moscow's Sakhalin reversal


EU concerned at Moscow's Sakhalin reversal


Russia’s decision to revoke environmental approval for the Sakhalin-2 oil and gas project led by Royal Dutch Shell has brought a protest from the European Commission. Shell has said there are no legal grounds for Moscow’s move and EU Energy Commissioner Andris Piebalgs said the company should have a chance to respond to Russian concerns.

In a statement Piebalgs’ said: “I take this announcement very seriously indeed. In order to ensure that companies are willing to invest in multi-billion euro energy projects, a secure and predictable investment climate is necessary in Russia, as it is in the EU, or indeed in any country. Without this, investment in new energy projects will be highly problematic, providing uncertainties for the world’s future energy supply.”

Shell has 55% of the project and Japanese companies Mitsui and Mitsubishi the rest. That makes Sakhalin-2 the only major energy project in Russia without any Russian involvement. Some analysts have labelled this an attempt by the Kremlin to get Russia’s Gazprom better terms for a stake in project. Gazprom has been trying to negotiate a 25% share. The Japanese government has warned Russia the situation could damage relations between the countries.

And the head of the International Energy Agency said he is worried by this. IEA Executive Director Claude Mandil accused the Russian government of “trying to move the goal posts by using their political strength” and he added “the result may be to deter investment.”

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