Prosecution A Poweful Economic Weapon in Russia

RIA Novosti reports that Russian prosecutors have discovered over 100 violations of environmental, migration and energy laws in the Sakhalin II energy project. The project has been long criticized by various environmental groups and Sakhalin residents for the alleged indifference of its operators (Shell, Mitsui and Mitsubishi) to environmental hazards that come with the complexity of the project in the extreme conditions of the Sakhalin Island. However, international observers attribute the last wave of governmental scrutiny to Russia’s pressure “to secure more favorable terms for state-controlled gas monopoly OAO Gazprom to join the project […] as the Kremlin is increasing its role in the lucrative energy sector.” In 2005, Shell increased the estimated cost of the project nearly two-fold to $22 billion dollars. However, this budget is yet to be approved by the Russian government which will only receive parts of the profit once the operators recoup their investment costs. Some observers note that Russia is not just trying to renegotiate the terms of the contract but that these charges are in effect an attempt to take over the control of the project and further consolidate the Russian natural resources in the hands of the state.