Russian officials threatened to sue global petrochemical giant Royal Dutch Shell for billions of dollars on Saturday over allegations of environmental violations at the Sakhalin-2 oil and gas development project.
The deputy head of the environmental watchdog Rosprirodnadzor, Oleg Mitvol said that Russia may even have the Shell-led project completely annulled. Shell owns a 55 percent stake in the $22 billion Sakhalin-2 project. Mitvol said that the environmental problems were caused by construction work that was harmful to the surrounding environment.
In September, Russia revoked an environmental permit that was granted to Shell in 2003. Sakhalin Energy, the name of the operator of the project, said at the time that the revocation would â€œlead to significant delay of the project, extra costs and irreparable damage to the reputation of this venture and the Russian Federation as a whole.â€
The Sakhalin-2 oil and gas project first came under pressure last year when it nearly doubled its cost estimates for the construction of what will be world's largest liquefied natural gas (LNG) scheme. The project consists of two offshore platforms, a pipeline, the world's largest liquefied natural gas plant and an oil terminal.