Russia may remove Exxon from key oil project: official

26th October 2010, Comments 0 comments

Russian authorities said Tuesday they might change the operator of the Sakhalin-1 project from Exxon to a Russian company, in a worrying sign to foreign investors in the country.

"Nobody is irreplaceable," said Russian Audit Chamber auditor Mikhail Beskhmelnitsyn, Interfax reported. "Today Russian companies can replace (foreign operators)."

He added that the operating license, currently held by Exxon's subsidiary, was not at risk of withdrawal but that "such a possibility exists."

Exxon's subsidiary Exxon Neftegas has clashed with Russian authorities over sales from the off-shore gas production project near Sakhalin Island in the Russian Far East, where estimated oil reserves are 2.3 billion barrels.

In the latest disagreement, the Audit Chamber said it found the US company's project expenses on Sakhalin-1 too high.

The statement contrasts with a recent move by President Dmitry Medvedev to court foreign investors to help Russia rebuild its aging infrastructure and modernize the economy.

"An Audit Chamber auditor is not the person making decisions on Exxon Neftegaz, but this pressure reflects how Russian authorities regard foreign investors," Sergei Aleksashenko, an economy expert with Carnegie Moscow Center, told AFP.

"Russian leaders don't understand modern economics and the sad state of Russia's economy," he added.

Exxon Neftegas has a 30 percent stake in the Sakhalin-1 project, as does Japanese Sodeco. Russia's Rosneft and India's ONGC hold 20 percent each.

© 2010 AFP

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