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Gazprom’s Sakhalin-2 Suspends Production for Remainder of 2007

OAO Gazprom's Sakhalin-2 offshore project won't resume production this year after it was damaged by weather, project operator Sakhalin Energy said.

"Evidently the platform won't be producing any more this year,'' Sakhalin Energy spokesman Ivan Chernyakhovsky said in a Moscow phone interview today.

It isn't possible to estimate how much production will be lost, Chernyakhovsky said, as output at this time of year is "highly dependent'' on ice conditions.

Sakhalin-2, a $22 billion oil-and-gas development north of Japan, has been dogged by concerns that it would harm fish- spawning grounds and the rare Western Gray Whale. After a campaign by Russian environmental regulators last year, Royal Dutch Shell Plc ceded control of the project to Gazprom, Russia's largest energy company.

Sakhalin Energy earlier today said it had a ``small release'' of oil into the Pacific Ocean after equipment was damaged by the recent severe weather.

"We think the spill is less than 10 liters,'' company spokesman Jim Niven said in a phone interview from Yuzhno- Sakhalinsk, citing preliminary estimates. There is no oil slick, only a thin "sheen'' of oil on the water surface, he added. Officials were at the scene to prevent a further release of oil and investigate the exact cause, Niven said.

"If it was only 10 liters, they wouldn't have made an announcement about it,'' Dmitry Lisitsyn, a local environmental campaigner, said by phone. Activists will examine satellite photos of the site tomorrow, he said.

Two weeks ago a Russian tanker split in two during a storm in the Kerch Strait, spilling 1,300 tons of oil into the waterway between the Black Sea and the Sea of Azov.

Sakhalin Energy made the statement today for the sake of transparency, Niven said.

Bad weather last week caused the Vityaz offshore facility to be suspended and a floating storage vessel to be disconnected, he said. When workers prepared to reconnect the vessel today, they discovered damage to a buoy that had resulted in a ``small'' oil spill.

Besides Shell, Mitsui & Co. and Mitsubishi Corp. are also minority shareholders.

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