Russia stepped up pressure on Royal Dutch/Shell's Sakhalin-2 venture on Thursday by saying it had suspended water permits in a move that could cause further delays to the $22 billion project.
Russia's resources ministry said in a statement its water resources agency had suspended 12 water-use licences of Sakhalin's top contractor Starstroi, a joint venture between Russian firms and Italy's Saipem. It gave Starstroi two months to put the violations right.
In September, Russia revoked environmental permits accusing Shell of violating their terms - a charge Shell denied. "During the suspension period they cannot start new work, but can only rectify violations," Anna Khitrova, a spokeswoman for the agency, told Reuters.
The Sakhalin-2 oil and gas project on the mountainous Pacific island of Sakhalin is one of the world's biggest energy projects, aimed at supplying growing Asian markets. It has come under increasing pressure since last year when it doubled cost estimates, infuriating Russian gas monopoly Gazprom, which was planning to buy a stake.
Ballooning costs have also angered Russia's government because under its deal with Shell, Sakhalin-2's operators are allowed to recoup their costs before Moscow sees any profits. Shell has spent around $10 billion on Sakhalin, which is due on stream in 2008 and much of the initial production has already found customers in Japan, South Korea and the United States.
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