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Gazprom Suspends Talks With Shell

The base of a platform for the Sakhalin-2 project being towed into position in mid-2005 (ITAR-TASS) September 19, 2006 -- Russian gas monopoly Gazprom said today it had suspended talks about an asset swap with Royal Dutch/Shell due to uncertainty surrounding Shell's Sakhalin-2 oil and gas project.

Gazprom had planned to swap half of a Siberian gas field for a 25 percent stake in Sakhalin-2, the world's largest liquefied natural gas project.

The announcement follows a decision by the Russian Natural Resources Ministry to rescind environmental approval for the project, which aims to develop energy fields off the Pacific Ocean island of Sakhalin.

The European Union's energy commissioner, Andris Piebalgs, has been highly critical of Russia's move, saying on September 19 that it puts at risk investments in Russia's energy sector totaling billions of euro.

Japan warned Russia on September 19 that its decision could damage bilateral relations and called for the project's development to go ahead transparently.

(Reuters, Interfax)

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