Shell: Putin Did Not Talk Costs
Royal Dutch Shell on Wednesday denied a report
that President Vladimir Putin had criticized the rising cost of
developing the Sakhalin-2 production field during his state visit
to the Netherlands.
The oil major's anticipated increase in costs
for the second phase of the project would not be allowed to rise
to $20 billion, Putin was cited by Kommersant as saying, with
rising costs potentially impacting the state's future income on
"No figures were discussed," Maksim
Shoob, spokesman for Shell's Moscow office, said Wednesday, adding
that Sakhalin-2 was discussed generally in Putin's meetings with
Dutch businessmen. The presidential press service declined to
At the root of the debate is a plan announced
in July by Sakhalin Energy -- the Shell-led consortium developing
Sakhalin-2 -- to roughly double the budget for the key second
phase of the project to $20 billion.
The new budget has yet to be approved by various
Russian government bodies still awaiting information on the reasons
behind the increases, the Industry and Energy Ministry said Wednesday.
Keeping the development costs to a minimum is
in Russia's interest because of the way the fields were divided
in a production-sharing agreement signed in 1994 by Sakhalin Energy,
the federal government and the Sakhalin regional administration.