President Vladimir Putin believes that a powerful, state-controlled energy sector is the key to Russia’s economic future, even if he has to strong-arm foreign investors to get it. But trampling property rights is risky. It is as likely to leave Russia an economic pariah as an energy superpower.
Read more in today's New York Times editorial...
Lisa Buckingham, the Financial Mail editor writes that the challenges that Shell is facing in the Sakhalin-2 project are great, but nothing new. Muddling through with hostile political regimes is day-to-day stuff for oil giants. The expropriation of assets is, historically, par for the course. Remember, for example, that BP had a goodly part of its business swiped by Iran.
As BP's chief executive, Lord Browne, remarked when discussing the difficulties of doing business in Russia, if not there then the alternative was violent, war-ravaged Africa. Looked at from this perspective, Russia appears eminently hospitable.
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Gazprom said Royal Dutch Shell Plc made new proposals for the Russian company to join its $22 billion Sakhalin-2 oil and gas venture, as President Vladimir Putin expands his control of the world's biggest energy industry.
Reuters earlier reported that Shell agreed to cede state-run Gazprom a majority stake in Sakhalin-2. Moscow-based Gazprom spokesman Sergei Kupriyanov and Shell Russia Vice President Maxim Shoob declined to confirm or deny the Reuters report, which cited unidentified industry people.
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Royal Dutch Shell’s decision to hand over control of the $22 billion energy project in Sakhalin to Russia’s state monopoly Gazprom is a victory for Russia’s new hardline policy on energy. It is also a warning to Western business that investment in Putin’s Russia still carries real risks, writes Michael Binyon of The Times.
A day after announcing the finding of more than 100 violations, Russia has suspended vital permits for Royal Dutch Shell's Sakhalin-2 oil and gas venture, in a move that may further delay the $22bn (£11bn) project, BBC reports.
