Russia may sue Royal Dutch Shell's Sakhalin group in international courts to claim billions of dollars in damages or even scrap the $22 billion production sharing deal, a Russian official said on Friday.
Oleg Mitvol, deputy head of environmental agency RosPrirodNadzor, said his agency had received a plan from Sakhalin-2 on how the company intended to rectify ecological damage but considered that it was "not serious".
"We are talking to lawyers and determining our position to file for damages according to international law. The place would be Stockholm and it would be the law of New York," Mitvol told Reuters.
The Sakhalin-2 oil and gas project has come under pressure since last year when it doubled cost estimates for the world's largest liquefied natural gas (LNG) scheme.
Royal Dutch Shell in London declined to comment on Mitvol's remarks. Shell spokesman Stuart Bruseth referred inquiries to Sakhalin Energy, the Shell-led consortium running the project in which Shell has a 55 percent stake.
The Kremlin is seeking to limit foreign involvement in the strategic energy sector and has also threatened ventures involving BP Plc and Exxon Mobil with legal and administrative measures. On Friday BP's joint venture TNK-BP said it had paid $1.44 billion in back taxes, a source close to the company said.
The doubling of costs has infuriated Russian gas monopoly Gazprom, which was planning to take a quarter of the project, and analysts say the pressure is designed to force Shell to cede a stake cheaply, or face further delays.
Sakhalin-2 is due to supply clients in Asia and the United States from mid-2008 and Shell has said that any significant delay would damage Russia's reputation and cost the country and the company up to $10 billion in lost profits.
The agency accuses Sakhalin-2 of polluting the bay near the LNG plant and cutting too many trees while building an 800-km (497 miles) pipeline across the Pacific island.
The Sakhalin Energy group, minority owned by Japan's Mitsui and Mitsubishi, had earlier said it had put all the violations right and would file a detailed plan. Mitvol said he had just received it.
"It is not serious. It is a joke collection. We had expected to see technical solutions and they are dealing with small local problems such as cones collection," Mitvol said. Mitvol said that the longer Sakhalin-2 delayed the detailed action plan, the more it had to lose. Under the production sharing agreement (PSA), all differences must be considered by a Stockholm arbitration under the law of New York.
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