Energy Commissioner Andris Piebalgs reacts to announcement of the cancellation of an environmental permit for the Sakhalin-2 project led by Shell

Tuesday, September 19 2006

Commissioner Piebalgs i stated: "I take this announcement very seriously indeed. In order to ensure that companies are willing to invest in multi-billion € energy projects, a secure and predictable investment climate is necessary in Russia as in the EU or indeed any country. Without this, investment in new energy projects will be highly problematic, providing uncertainties for the world's future energy supply.

Every country has the legitimate right, and indeed obligation, to ensure that any oil or gas extraction on its territory is undertaken to the highest possible environmental standards. This is an objective whole-heartedly shared by the EU.

However, in the event that such issues have been identified regarding the Sakhalin-2 development, I believe that they should be clearly and unequivocally identified by the Russian authorities and Shell must be given an appropriate time to resolve them according to defined and clear criteria, set out in advance.

The successful EU-Russia Energy Partnership is based on the mutual respect of transparency, predictability and non-discrimination. This applies as much to the ability of EU companies to invest in Russia as to the right of Russian companies to sell gas and oil freely at both upstream and downstream levels in the EU.

I have no doubt that in the light of these share values the Russian authorities will be able to rapidly resolve this technical issue with Shell in a satisfactory manner. I shall be writing to Russian Energy Minister Khristenko to offer my support for a rapid resolution of this issue".