Dow Jones Commodities News via Comtex: "A Russian government committee Friday rejected Total SA's (TOT) financial plan for the Kharyaga oil production project for 2005 and 2006, claiming it had failed to stick to a plan approved earlier in the year.": "The ministry noted Total's cost estimates were more than 10% higher than originally planned.": *"This report proves that companies other than Shell are also over budget on projects in Russia, but not by 260% as is the case with Shell!": Monday 21 November 2005
By Geoffrey T. Smith, Dow Jones Newswires
A Russian government committee Friday
rejected Total SA's (TOT) financial plan for the Kharyaga oil production project
for 2005 and 2006, claiming it had failed to stick to a plan approved earlier in
the year.
"We drew the operator's attention to the fact that the present estimates diverge
from what was approved in May 2005, and so the company has to present more
detailed figures regarding all cost items," said Olga Rybak, deputy head of the
department of structural and investment policy at the Ministry of Industry and
Energy, in a statement.
The ministry noted Total's cost estimates were more than 10% higher than
originally planned. It said Total had claimed an extra $3.5 million in
additional expenses for increased transportation costs for its output.
The ministry also noted the cost estimates for 2004 still haven't been fully
approved. It said it requested Total to present new estimates by the end of next
week.
Total has indicated it plans to withdraw legal action against the Russian
government over what it sees as backsliding on the terms of the
production-sharing agreement that governs the Kharyaga project.
The PSA was one of the last to be approved by the government before it
effectively turned its back on the concept, preferring to overhaul the part of
the civil code that governs oil production.
*Comment by ShellNews.net: This report proves that companies other than Shell are also over budget on projects in Russia, but not by 260% as is the case with Shell!