Chairman of the Gazprom management board Alexey Miller (left) and chairman of the board of directors of Gazprom, First Vice Prime Minister of the Russia Dmitry Medvedev
Photo: Dmitry Dukhanin
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Shell Has Three Months to Reach Agreement with Gazprom
Gazprom officially confirmed its intention to obtain a 50-percent share in Sakhalin 2 yesterday. Chairman of the board of directors of the monopoly Dmitry Medvedev indicated that the company expects a discount from the current participants in the project. The Federal Resource Use Supervisory Service's (Rosprirodnadzor) threat to demand up to $30 billion for damage done to the environment from project operator Sakhalin Energy in the Arbitration Institute of the Stockholm Chamber of Commerce may help Gazprom in price negotiations.
Mitsui representatives stated yesterday that the company is not opposed to Gazprom's becoming the main shareholder in the project and that neither it nor Mitsubishi are participating in the negotiations. Mitsui and Mitsubishi now hold 25 and 20 percent in the project respectively, and Shell holds 55 percent.
Rosprirodnadzor chairman Oleg Mitvol held consultations yesterday with Russian, British and American lawyers and ecological organizations on the prospects for suits against Shell in Russian and international courts. Mitvol evaluated the damage to the environment at $10 billion and said that that sum may be tripled. He added that court actions could begin in March of next year, although no legal representation has been chosen yet, and that his agency's legal position would be presented to the government next week.
Shell has thus effectively been given three months to reach an agreement with Gazprom. Denis Borisov IK Solid analyst, suggested that the discount Gazprom received may range between 10 and 30 percent and that no court action will be taken if an agreement is reached, since it would not be in the interests of either side. The total value of the project has been estimated at $9-10 billion.
Minister of Industry and Energy Viktor Khristenko stated yesterday that the budget for the second stage of the project would be approved in the first quarter of next year. The operating company is asking that the budget be increased from $12 billion to $20 billion. Khristenko said that Gazprom's participation in the project would not effect the decision on its budgeting.
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All the Article in Russian as of Dec. 13, 2006
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