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Shell Sakhalin unit halts pipeline work

Sakhalin Energy, a Royal Dutch Shell Plc-led venture that's one of Russia's biggest oil and gas projects, halted pipeline construction because of environmental concerns, a step it said won't put back production.

Subcontractors ignoring licence conditions in a sensitive landslide area on Sakhalin Island prompted the halt, company spokesman Ivan Chernyakhovsky said by telephone in Moscow.

The stoppage affects "very small sections"of the pipeline and won't change the project's production schedule, he said.

The Shell-led Sakhalin-2 project has been charged with environmental violations and massive cost overruns as President Vladimir Putin extends state control over Russia's oil and gas industry. OAO Gazprom, the state-run natural-gas monopoly, wants to acquire at least 25% of Sakhalin-2, which is totally owned by foreign companies.

© Bloomberg

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