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Gazprom Gains Control Of Sakhalin Project

A gas plant under construction as part of the Sakhalin-2 project (ITAR-TASS) December 21, 2006 -- Anglo-Dutch oil giant Shell said today that Russian state-controlled natural gas giant OAO Gazprom will acquire a 50 percent-plus-one share stake in the Sakhalin-2 energy project from Royal Dutch Shell and Japan's Mitsui and Mitsubishi, for $7.45 billion.

Shell spokesman Maxim Shoop said the deal was signed at a Kremlin meeting between President Vladimir Putin and top executives from Shell and Gazprom along with officials from the project's Japanese shareholders.

Putin hailed the deal, thanking those at the meeting for their "flexibility in the course of these negotiations."

He promised that the Russian government "will do everything to carry this project through."

The deal came after months of pressure from Russian regulators about the implementation of the $22 billion project to extract natural gas from the Pacific island of Sakhalin.

The project represented the largest single foreign investment into Russia.

Russian environmental authorities have threatened the Sakhalin-2 operator with administrative sanctions, withdrawal of key permits, and environmental damages claims in what analysts have interpreted as an attempt to improve Gazprom's bargaining position in the project.

(compiled from agency reports)

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