The European Bank for Reconstruction and Development is poised to withdraw its substantial financial backing for the Sakhalin energy project after Moscow wrestled control away from Shell and its partners.
The European Bank for Reconstruction and Development (EBRD) was ready to lend the project $300 million, the Wall Street Journal Europe reports, but its business code of conduct will mean it is likely to shy away from dealings with a state-run operation.
While the EBRD has officially stated that it has not made a decision regarding the issue, a source familiar with the bank’s conduct said that it did not involve itself with ‘nationalized’ projects.
In December, Moscow convinced Shell and its collaborators to sell a controlling share of the Sakhalin project to Russian state-owned gas company Gazprom. The agreement came as the resolution to potential legal issues surrounding the environmental impact of Shell’s Sakhalin program.