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Mitsui May Sell Some Sakhalin Shares

Mitsui is close to selling part of its stake in the Sakhalin-2 oil and gas project to Gazprom, the Japanese company's president said Tuesday.

Talks may "soon" be concluded, Shoei Utsuda said in an interview with Bloomberg in Tokyo. He failed to provide a concrete timeline or the amount of shares under negotiation.

Criticism by Russian officials of the project, run by Shell for minority shareholders Mitsui and Mitsubishi, has widely been seen as a means of putting pressure on the consortium to cede a major stake to state-run Gazprom.

Shell, which holds a 55 percent stake in the project, agreed last year to hand over 25 percent to Gazprom, but those talks stalled after the British-Dutch oil major announced that cost estimates for the project had doubled to $22 billion.

Speculation has long swirled that Mitsui, a 25 percent shareholder, was considering selling 3 percent to Gazprom, and that Mitsubishi, which owns the remaining 20 percent, was willing to part with 2 percent.

Such a deal would put Gazprom and Shell on equal footing in the project, leaving them both with 30 percent.

A bill that would ensure Russian companies have a 51 percent controlling stake in "strategic" oil and gas projects has been stalled for the past two years as government agencies have debated how to define strategic deposits.

It was unclear what talks were going on between Mitsui and Gazprom. A Gazprom spokesman said no talks were taking place.

A Mitsui spokesman said by telephone from Tokyo that all talks on stake transfers were taking place between Gazprom and Shell.

"Gazprom and Shell are in talks. Mitsui is waiting and watching the situation," the spokesman said. "After negotiations are complete, we will think about what to do."

"Gazprom is a good candidate" for entry into the project, he added.

Mitsui's Utsuda told Bloomberg that Mitsui's talks with Gazprom were focusing on "the extent to which Gazprom would shoulder" the increased cost announced by Shell last year.

The doubling of costs has been followed by threats from the Natural Resources Ministry to withdraw a key environmental license from the project's operator, Sakhalin Energy, as well as warnings of criminal and legal proceedings.

Audit Chamber official Sergei Abramov said Monday that Moscow expected Shell to present changes to its production sharing agreement with the government to allow the state to collect greater profits.

Sakhalin-2 is the only major oil and gas project in the country without a Russian partner.

© The Moscow Times

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