Houston Chronicle: Shell won't say if Russia is demanding $2.5 billion: “The Royal Dutch-Shell Group of Companies, the leader of a project developing Russia's Sakhalin II oil and gas deposit, declined Wednesday to comment on a report that the venture may face demands to pay the Russian government $2.5 billion.” (ShellNews.net) 10 Feb 05

By MICHAEL TEAGARDEN and HALIA PAVLIVA

Bloomberg News

The Royal Dutch-Shell Group of Companies, the leader of a project developing Russia's Sakhalin II oil and gas deposit, declined Wednesday to comment on a report that the venture may face demands to pay the Russian government $2.5 billion.

Russia's Audit Chamber said the Sakhalin II partners overpaid contractors by $2 billion, causing a reduction in the government's tax revenue from the project, the newspaper Vedomosti reported. The report cited one of the auditors who led the investigation, Mikhail Beskhmelenitsien.

"I have not seen the full report, which makes it difficult to comment," said John Barry, head of Shell's Russian unit, at a news conference in Moscow. "I am very enthusiastic about Russia, without being naive."

Shell spent $1.7 billion in Russia last year to develop the Sakhalin project and the Salym group of fields in West Siberia through its Salym Petroleum Development venture, Barry said.

The $12 billion Sakhalin venture is one of Russia's two biggest oil and gas developments. It plans to start producing 9.6 million tons a year of liquefied natural gas in 2007.

http://www.chron.com/cs/CDA/ssistory.mpl/business/3032268