Russians put the kybosh on Shell over Sakhalin-2 project

galway | rights, freedoms and repression | other press Wednesday December 20, 2006 20:48 by TJ - Shell to Sea

Gazprom is expected to buy a 30% stake in the world's largest liquefied gas project from Shell for about $4bn in cash

Today's Guardian is reporting that : The state-owned Russian group,Gazprom, is close to taking control of Shell's Sakhalin-2 project with Shell chief executive Jeroen van der Veer making a third trip to Moscow in as many weeks to tie up the final details of the agreement.

The Anglo-Dutch group was given a warning from ratings agency Fitch which said the surrender of its controlling stake in Sakhalin could damage Shell's financial credibility and undermine its attempts to rebuild its reserves.

"The credit impact on Shell will depend on the form and consideration it will receive from Gazprom for a 30% stake, whether Shell will continue to maintain operational control given its technical expertise in large LNG projects and the extent of changes to the hitherto very favourable terms of the respective production sharing agreement it will need to accept as part of the transaction," said Thomas Baumeister, senior director in Fitch's energy team.

Clearly, Shell's on the run in Russia and under pressure in Nigeria, with a series of blockades of the Bellinaboy site in the New Year, Shell to Sea could turn the run into a rout or at least soften the buggers cough further?.