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Shell says has not surrendered on Sakhalin-2
12 Dec 2006 13:44:42 GMT
Source: Reuters

MOSCOW, Dec 12 (Reuters) - Royal Dutch Shell <RDSa.L> said on Tuesday that it had not surrendered its Sakhalin-2 oil and gas project to Russian gas firm Gazprom <GAZP.MM>, responding to a Reuters report that it had agreed to cede control.

"There's been a lot of reporting that we've thrown in the white flag. The negotiations have not been concluded, contrary to what's been said. There are a number of options that are being considered," Shell spokesman Alf D'Souza told Reuters.

"There's no doubt that the eyes of the world are on this foreign investment, the largest in Russia. Shell and its fellow investors expect to be treated equitably."

Shell's partners in Sakhalin-2 are Japan's Mitsui <8031.T> and Mitsubishi <8058.T>.

Analysts have said a campaign by Russian environmental officials was part of a Kremlin drive to regain control over much of the energy sector and to help Gazprom bargain for a bigger role in Sakhalin-2.

But D'Souza said Shell took all allegations of environmental violations extremely seriously and responded to fix them.

"Their character is wholly temporary and reversible. These are not permanent environmental problems. They are simply consequent to the construction activity that's going on. It happens in every project," he said.

"To take it out and isolate it as an example of egregious harm is quite incorrect."
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A child watches his mother walking out of the Yenisei River after a swim in Russia's Siberian city of Krasnoyarsk January 31, 2007. Winter temperatures in central Siberia are higher than the usual winter average this year.