Netherlands (6) -- Analyses-- July-September 2006

The problem with Sakhalin

22.09.2006

British-Dutch company Shell, which owns 55 percent of Sakhalin-2, has said the cancelled approval may mean more delays in starting liquefied natural gas (LNG) supplies to Japan and the United States and yet more costs. British Foreign Minister Margaret Beckett has already raised the issue with her counterpart Sergei Lavrov, but Russia's Natural Resources Ministry has said it refuses to accept the cost increases proposed by Shell. Balkende said at his regular weekly press conference that he had called Putin to express his concern about the Sakhalin oil and gas project, Dutch news agency ANP reported. The two agreed that the companies concerned and Russian authorities would stay in direct contact and try to find a solution, Balkenende added. The Kremlin said in a statement that Putin and Balkenende had discussed practical aspects of bilateral relations in the light of agreements reached during Putin's visit to the Netherlands in November last year. During that trip, Putin slammed Shell at a meeting with Dutch business executives and spent more than 30 minutes criticising the firm's cost overruns, according to a Russian newspaper report. The Kremlin statement said that during their phone call the two leaders "expressed satisfaction at the steady development of cooperation" in energy and other areas, which would be discussed at upcoming intergovernmental meetings. "Both leaders expressed their confidence that the various issues that inevitably come up during the implementation of large-scale joint projects will be resolved in constructive fashion and in the spirit of understanding that characterises the relations between the two countries," it said.

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