Earth Science News  





. Russia Tightening Grip On Energy Sector With Sakhalin Move

Analysts said Sakhalin-2 (pictured) is particularly resented by Russian authorities as it falls under one of three production sharing agreements (PSAs) concluded between Western oil majors and the Russian government in the 1990s.
by Dario Thuburn
Moscow (AFP) Sep 18, 2006
A decision by Russia to scrap environmental permits for the country's largest foreign investment project is further evidence of Kremlin policy to extend state control over the energy sector, analysts said. "It just means that the state continues to tighten its grip on the oil sector," said Valery Nesterov, an oil and gas analyst at the Troika Dialog investment house in Moscow. "The pressure is very serious."

Russia's energy sector was almost fully privatised in a period of economic turmoil after the fall of the Soviet Union in 1990s and control over the country's resources effectively slipped away from government control.

President Vladimir Putin has reversed this policy, presiding over the dismemberment of Yukos, which was once the country's largest oil producer, and promoting two huge state-controlled energy firms, Rosneft and Gazprom.

The move by Russia's natural resources ministry on Monday to cancel an environmental permit necessary for work at Sakhalin-2 effectively suspends the energy project, which is being developed by a Western consortium led by Shell off Russia's Pacific coast.

The 20-billion-dollar programme -- the world's biggest privately funded energy project -- has been heavily criticised by environmental groups for alleged breaches.

But energy analysts said environmental concerns were a pretext for behind-the-scene manoeuvring to give Russian state-backed energy companies a greater stake in projects dominated by foreign firms.

"Living in Russia, I'm surprised about such concern about the environment, especially on such a far away island," Nesterov said.

Andrei Gromadin, an expert from Russia's MDM Bank, agreed.

"I don't exclude that there are some breaches but it's difficult to imagine that this project has been going on for so long and suddenly just now they've found all these problems," Gromadin said.

Analysts said Sakhalin-2 is particularly resented by Russian authorities as it falls under one of three production sharing agreements (PSAs) concluded between Western oil majors and the Russian government in the 1990s.

"Russia is strong-arming to try to force a deal that would change the ownership structure of these things," said Al Breach, an analyst with UBS Warburg.

Gromadin explained that "the state has very few instruments for control" over a PSA, which isolates companies from changes to tax laws and only feeds money back to the state once energy firms recoup their investment.

"The state can no longer accept the PSAs," Gromadin said.

The Exxon-led consortium developing the Sakhalin-1 field and Total, which is working on the Kharyaga oil field in the far north of Russia, are the two other PSAs in Russia.

But Nesterov said the government's tactics to influence the PSAs were "alarming" foreign investors and pointed to a "volatile" energy policy in Russia that cannot be sustained.

Source: Agence France-Presse

Related Links
Powering The World in the 21st Century

New Ethanol Process Offers Lower Costs, Environmental Benefits
West Lafayette IN (SPX) Sep 19, 2006
Purdue Research Foundation has licensed a technology to Bio Processing Technology Inc. for the development of a new environmentally friendly method to produce ethanol that also costs less than current methods.

.
Get Our Free Newsletters Via Email
  



  • Analysis: Strengthening FEMA in DHS
  • Ideas To Rebuild Hurricane-Devastated New Orleans Showcased At Italian Fair
  • China's natural disasters cost billions, kill thousands: report
  • The Role Of Academia In The Global Aid Industry

  • Computer Model Looks At How To Cool The Earth Back Down
  • Warming Climate May Put Chill On Arctic Polar Bear Population
  • Meeting Tries To Bring Poor Nations Onboard Climate Change Pact
  • English Country Gardens Under Attack From Global Warming

  • Envisat Symposium 2007 Highlights EO Satellite Achievements
  • GeoEye Approved For Listing On The Nasdaq Global Market
  • Scientists Sketch City In Geocyberspace
  • Google Maps Spotlight Changes Across The Earth

  • New Ethanol Process Offers Lower Costs, Environmental Benefits
  • Deep-Sea Oil Rigs Inspire MIT Designs For Giant Wind Turbines
  • Russia Tightening Grip On Energy Sector With Sakhalin Move
  • China Urges Stable International Environment For Energy Security

  • Existing Vaccine Facilities Can Handle Flu Pandemic
  • Indonesian Bird Flu Toll Increases Further
  • Bird Outbreaks In Four Countries
  • University Launches New Website On 1918 Flu Pandemic

  • Paleontologists Find 67 Dinosaurs In One Week Across Gobi Desert
  • California Scientists Find Natural Way To Control Spread Of Destructive Argentine Ants
  • US Court Jails Animal Rights Activists
  • Lay Off The Stingrays Warns Australian Environoment Minister

  • Philippines Oil-Spill Tanker 'May Have Sunk During Cargo Heist'
  • Study To Forecast Side-Effects Of Pollution Policy
  • Residents Riot As Ivory Coast Promises Start To Toxic Waste Clean-Up
  • Watchdog Calls For severe Punishment For Pollution Cases In China

  • You May Be Losing More Than Just Your Memory
  • Modern Humans, Not Neandertals, May Be Evolution's 'Odd Man Out'
  • Too Many Men Could Destabilize Society
  • How Did Our Ancestors' Minds Really Work

  • The content herein, unless otherwise known to be public domain, are Copyright 1995-2006 - SpaceDaily.AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA PortalReports are copyright European Space Agency. All NASA sourced material is public domain. Additionalcopyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by SpaceDaily on any Web page published or hosted by SpaceDaily. Privacy Statement