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Russia tells Shell to review pipelines

Russia's environmental watchdog, which has already ordered to Royal Dutch Shell to stop work on onshore pipelines on Sakhalin, said on Wednesday the group needed to redraw the plan.

"Onshore pipeline construction can be resumed only after the project is reworked, that it meets all environmental requirements and is discussed with scientists and independent environmental organisations," the resources ministry said in a statement.

Industry analysts say the halt, which came as the project is already 75 percent completed, may cause further delays to Shell $20 billion (10.5 billion pound) liquefied natural gas project off Russia's remote Pacific island.

They also note that increased pressure from Russia comes amid attempts by gas monopoly Gazprom to secure 25 percent in the project.

Shell has said it had stopped building two onshore pipelines and would restart work only after ironing out differences with Russian authorities.

The project, known as Sakhalin Energy, is already producing over 70,000 barrels of oil per day for around half the year, but plans to more than double that output all year round when its platforms and pipelines are fully up and running.

It plans to ship its first cargo of LNG, which will be the mainstay of the project, in mid-2008.

Sakhalin Energy, in which Shell is a 55 percent shareholder, is Russia's biggest foreign investment project and the world's largest LNG development. The other shareholders are Japan's Mitsui & Co. Ltd. and Mitsubishi Corp.

© Reuters

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