Shell-led Sakhalin project official says revoking permit will have 'irreversible' consequences

A top official from a Shell-led liquefied gas project off Russia's Far East island of Sakhalin said Tuesday that plans to revoke its environmental permit would freeze work for 17 months and lead to 15,000 lost jobs.

Photo: Shell-led Sakhalin project official says revoking permit will have 'irreversible' consequences

Russia's natural resources ministry said last week that it would revoke the permit at Sakhalin-2 which is being developed by Sakhlain Energy, a consortium led by Shell.

The decision must still be approved by a separate technological safety agency, and Sakhalin Energy's vice president for corporate affairs Igor Ignatyev said the company had yet to receive a copy of the final decision.

"If it is signed, it will have irreversible effects," Ignatyev said on Ekho Moskvy radio. "I have the sense that the people who take these steps don't know what the legal consequences of this might be."

Ignatyev said the decision, if confirmed, would lead to mass lay-offs and would see 3,500 permits and licenses annulled. "It's not the kind of excercise where you say 'no today I canceled it, tomorrow I'll sign it again.' The consequences are very serious and irrevocable."

Analysts have suggested the ministry's move is a bargaining tool aimed at securing more favorable conditions for state gas monopoly Gazprom, which is in negotiations to join the project, reports AP.

Ignatyev did not comment directly on that issue, but noted "there are a lot of coincidences."

The case comes amid pressure on a number of foreign-controlled energy projects that observers say is an attempt to secure a bigger role for Russian companies.