Global energy giant Shell will be forced to renegotiate the terms of its contract to operate its facility on the island of Sakhalin, with the significant provision that it sells a stake in the business to Gazprom, reports have suggested.
The Anglo-Dutch oil firm is anxiously awaiting the publication of a report into the environmental impact of its Sakhalin gasification plant and whether it has violated the regulations of the host country.
If found to be guilty of breeches, Shell faces unlimited fines and now, according to reports, also faces the prospect of having to renegotiate the terms of its involvement in the Sakhalin project to a less favorable position, while also having to agree to sell a stake in its business to Russian state gas monopoly Gazprom.
According to the Independent newspaper, Russia is keen to renegotiate the terms of Shell license because it is unhappy with its relative weak position in the original deal agreed over a decade ago. Moscow also wants to see Gazprom grab a share of the action.
With these desires in mind, many industry onlookers have interpreted Russia’s environmental audit of Shell’s Sakhalin business as just an excuse to take power from the western European company.