THE WALL STREET JOURNAL: Shell: Cooperating In Full With Sakhalin-2 Russia Audit: “In a recent report, Russia's State Audit Chamber, an oversight agency, said the country suffered $2.5 billion in damages from abiding by the terms of the production-sharing agreement for the oil and gas project located off Russia's Pacific coast.” (ShellNews.net) 9 Feb 05
DOW JONES NEWSWIRES
MOSCOW -- Royal Dutch/Shell Group (RD, SC), the largest shareholder in Sakhalin-2, Wednesday said it was cooperating fully with Russian state auditors.
In a recent report, Russia's State Audit Chamber, an oversight agency, said the country suffered $2.5 billion in damages from abiding by the terms of the production-sharing agreement for the oil and gas project located off Russia's Pacific coast.
"We fully cooperated in the audit and provided all the documents required in a very transparent way," John Barry, head of Shell 's operations in Russia, told Dow Jones Newswires on the sidelines of an investment conference.
Barry reiterated that Russia will receive $40 billion-$50 billion from the Sakhalin-2 over the project's lifetime.
The other Sakhalin-2 shareholders are Japan's Mitsui & Co. Ltd. (MITSY) and Mitsubishi Corp. (8058.TO).
Russian government officials quoted by the Vedomosti newspaper Wednesday played down the report, saying it was in Russia's interests to maintain the stable fiscal regime provided for in the agreement.
Separately, Barry said he believed Sakhalin-2 had a good chance of winning a tender to supply Korea Gas Corp. (036460.SE).
"I'm very optimistic we'll see progress in supplying Korea," he said.
Barry said Shell continued to negotiate with Russia's state-controlled gas monopoly OAO Gazprom (GSPBEX.RS) on a wide-ranging cooperation agreement.
"Developments were slowed down by a number of events that took place toward last year, which occupied Gazprom management's time," Barry said.
Gazprom had planned to bid for OAO Yukos' (YUKO.RS) Yuganskneftegaz oil unit at a Dec. 19 government-run auction, but a U.S. court ruling barred the gas giant from doing so.
Barry also said Shell had made a preliminary approach to Gazprom on possible joint development of the giant Shtokman gas field in the Barents Sea.
Shell is the latest in a long line of global energy majors that have said they are working together with Gazprom on the field's development.
Company Web site: http://www.sibneft.com
-By Geoffrey T. Smith and Anna Raff, Dow Jones Newswires; +7 095 974 80 55; geoffrey.smith@dowjones.com; anna.raff@dowjones.com