Processing Magazine

Russia halts Shell gas project

September 19, 2006

Russia''s Natural Resources Ministry said it has revoked the environmental approval of a Shell-led liquefied natural gas project on the Far East island of Sakhalin, a decision that could effectively halt work on the project, the Associated Press reports. The announcement came after prosecutors alleged over the weekend that permission to develop the second phase of the $20 billion project had been granted illegally. The project has been subject to heightened scrutiny by authorities after it announced last year that its costs would double, thus delaying the flow of revenues to state coffers. Last week, Natural Resources minister Yury Trutnev said the attention was aimed at "defending (Russia''s) interests," in the light of the cost hike. In August the company halted some pipeline construction work after complaints by the ministry that it presented a risk of mudslides.