by Dmitry Butrin
The heads of the companies that hold shares in Sakhalin 2 signed a protocol for the sale of 50 percent plus one share in the project to Gazprom for $7.45 billion. After that, Russian President Vladimir Putin convinced executives from Shell, Mitsubishi, Mitsui and Gazprom in the Kremlin that they had done it voluntarily, and so all their problems with Sakhalin 2 were behind them.
The shareholders in Sakhalin Energy signed the protocol on Gazprom's entrance into Russia's largest foreign-investment oil and gas production project early in the day. So, by the time Shell head Jeroen van der Veer, Mitsui president Shoei Utsada, Mitsubishi president Yorihiko Kojima and Gazprom head Alexey Miller entered the Kremlin reception hall where Putin and Minister of Industry and Energy Viktor Khristenko were waiting for them, everything had been agreed on.
It was clear that the former owners of SE had gotten the best deal they could hope for. But everyone, except Khristenko, looked as if the deal were being settled then and there. They were all waiting for the head of state to explain what had just happened to them.
The president began with a general overview of what he knows about it. In the Putin version, practically all the energy companies in the world work in the Russian fuel and energy complex, since that sector of the economy is “very liberalized.” Not surprisingly, “problems arise” with them from time to time.
“But they don't worry us!” the president said unexpectedly. Before anyone could get nervous about that, he went on to explain that that was because they saw a serious, thorough, businesslike approach to those problems on the part of SE, and that was the most important thing.
Putin did not explain just what problems required that approach. But he did say just how they had been solved. He told van der Veer that Shell had invited Gazprom to join Sakhalin 2 two years ago, and only now was that decision coming to fruition. The Shell chief executive and his colleagues were furiously taking notes as he spoke. “It is a corporate decision. Our government has been informed of it and we approve it,” the president said emphatically. He wrote several figures in a notebook quickly and showed them to Khristenko while the translator translated. They looked at each other and smirked.
The president explained further to those present and still taking noted that the Russian government was glad that they and Russian environmental departments have harmonious approaches towards resolving fundamental environmental problems associated with the project. And he was very glad that, after their visit to the Kremlin, Messrs. Miller Utsuda, Kojima and van der Veer were going to go see Natural Resources Minister Yury Trutnev. It was, of course, practically a formality – “the problem can be considered fundamentally solved.”
Everyone wisely resisted asking just what problem that was. The decisive phase of negotiations between Gazprom and the SE shareholder began this fall with charges of ecological violations on Sakhalin being pressed by Federal Resource Use Supervisory Service, which answers to the Natural resources Ministry. At the time of the meeting in the Kremlin, deputy chairman of that agency Oleg Mitvol was telling journalists somewhere else that problems remain, but he could be misinformed.
Finally, the president informed the new shareholders of SE that Russia considers an increase in expenditures on Sakhalin 2 risky. But the shareholder take the risk on themselves, so no one minds. A few weeks ago, no one in the government was commenting on whether the Sakhalin 2 budget would be increased. Now they had the answer.
Then everyone else presented their versions of what happened. Khristenko reported that the growth of expenditures ay Sakhalin 2 would not decrease the income of the Russian Federation from it and the “fair” charges against SE by the Natural Resources Ministry would not interfere with work and the gas supplies already contracted for with Japanese consumers should not be delayed. Van der Veer shared the fact that Gazprom will become the majority shareholder in the project. Kojima mentioned that Gazprom is still only “one of the shareholders” in SE and, he claimed, the old shareholders had been reaching an agreement with the Ministry of Industry and Energy. That suits Mitsubishi fine, and the company considers the event “an important milestone in the development of the project.”
Kojima's words weren't much to the president's liking. He and Khristenko exchanged glances. Then the president reminded the Japanese, Mitsui and Mitsubishi both, that they had not been opposed to the entrance of Gazprom at Sakhalin 2 “from the very beginning.” Utsuda spoke more cautiously, saying that gas supplies from Sakhalin 2 will come right on time onto the important markets of Asia and Japan. They brought down no comment from Putin.
Finally, Miller stated in a cold, official tone what had happened from his point of view. Gazprom has acquired 50 percent plus one share in SE from Shell, Mitsui and Mitsubishi for $7.45 billion in cash.
“How much?!?” van der Veer looks up from his notes at Putin in amazement.
“Seven billion, four hundred fifty million dollars, sir,” the translator sniffed as the president smiled.
And thus the ice was broken at the table. As the journalists left, they could turn around to see Utsuda telling the president something with elaborate gestures, van der Veer pressing his glasses up the bridge of his nose and Miller sitting with an ideally straight back. The president's words that “with good will from all sides we will be able to solve all problems” were unforced. The SE shareholders would have no more problems after December 21, 2006, and they understood without any words that they had finally found aplace in Moscow where no one would deceive them.
kommersant.com
The heads of the companies that hold shares in Sakhalin 2 signed a protocol for the sale of 50 percent plus one share in the project to Gazprom for $7.45 billion. After that, Russian President Vladimir Putin convinced executives from Shell, Mitsubishi, Mitsui and Gazprom in the Kremlin that they had done it voluntarily, and so all their problems with Sakhalin 2 were behind them.
The shareholders in Sakhalin Energy signed the protocol on Gazprom's entrance into Russia's largest foreign-investment oil and gas production project early in the day. So, by the time Shell head Jeroen van der Veer, Mitsui president Shoei Utsada, Mitsubishi president Yorihiko Kojima and Gazprom head Alexey Miller entered the Kremlin reception hall where Putin and Minister of Industry and Energy Viktor Khristenko were waiting for them, everything had been agreed on.
It was clear that the former owners of SE had gotten the best deal they could hope for. But everyone, except Khristenko, looked as if the deal were being settled then and there. They were all waiting for the head of state to explain what had just happened to them.
The president began with a general overview of what he knows about it. In the Putin version, practically all the energy companies in the world work in the Russian fuel and energy complex, since that sector of the economy is “very liberalized.” Not surprisingly, “problems arise” with them from time to time.
“But they don't worry us!” the president said unexpectedly. Before anyone could get nervous about that, he went on to explain that that was because they saw a serious, thorough, businesslike approach to those problems on the part of SE, and that was the most important thing.
Putin did not explain just what problems required that approach. But he did say just how they had been solved. He told van der Veer that Shell had invited Gazprom to join Sakhalin 2 two years ago, and only now was that decision coming to fruition. The Shell chief executive and his colleagues were furiously taking notes as he spoke. “It is a corporate decision. Our government has been informed of it and we approve it,” the president said emphatically. He wrote several figures in a notebook quickly and showed them to Khristenko while the translator translated. They looked at each other and smirked.
The president explained further to those present and still taking noted that the Russian government was glad that they and Russian environmental departments have harmonious approaches towards resolving fundamental environmental problems associated with the project. And he was very glad that, after their visit to the Kremlin, Messrs. Miller Utsuda, Kojima and van der Veer were going to go see Natural Resources Minister Yury Trutnev. It was, of course, practically a formality – “the problem can be considered fundamentally solved.”
Everyone wisely resisted asking just what problem that was. The decisive phase of negotiations between Gazprom and the SE shareholder began this fall with charges of ecological violations on Sakhalin being pressed by Federal Resource Use Supervisory Service, which answers to the Natural resources Ministry. At the time of the meeting in the Kremlin, deputy chairman of that agency Oleg Mitvol was telling journalists somewhere else that problems remain, but he could be misinformed.
Finally, the president informed the new shareholders of SE that Russia considers an increase in expenditures on Sakhalin 2 risky. But the shareholder take the risk on themselves, so no one minds. A few weeks ago, no one in the government was commenting on whether the Sakhalin 2 budget would be increased. Now they had the answer.
Then everyone else presented their versions of what happened. Khristenko reported that the growth of expenditures ay Sakhalin 2 would not decrease the income of the Russian Federation from it and the “fair” charges against SE by the Natural Resources Ministry would not interfere with work and the gas supplies already contracted for with Japanese consumers should not be delayed. Van der Veer shared the fact that Gazprom will become the majority shareholder in the project. Kojima mentioned that Gazprom is still only “one of the shareholders” in SE and, he claimed, the old shareholders had been reaching an agreement with the Ministry of Industry and Energy. That suits Mitsubishi fine, and the company considers the event “an important milestone in the development of the project.”
Kojima's words weren't much to the president's liking. He and Khristenko exchanged glances. Then the president reminded the Japanese, Mitsui and Mitsubishi both, that they had not been opposed to the entrance of Gazprom at Sakhalin 2 “from the very beginning.” Utsuda spoke more cautiously, saying that gas supplies from Sakhalin 2 will come right on time onto the important markets of Asia and Japan. They brought down no comment from Putin.
Finally, Miller stated in a cold, official tone what had happened from his point of view. Gazprom has acquired 50 percent plus one share in SE from Shell, Mitsui and Mitsubishi for $7.45 billion in cash.
“How much?!?” van der Veer looks up from his notes at Putin in amazement.
“Seven billion, four hundred fifty million dollars, sir,” the translator sniffed as the president smiled.
And thus the ice was broken at the table. As the journalists left, they could turn around to see Utsuda telling the president something with elaborate gestures, van der Veer pressing his glasses up the bridge of his nose and Miller sitting with an ideally straight back. The president's words that “with good will from all sides we will be able to solve all problems” were unforced. The SE shareholders would have no more problems after December 21, 2006, and they understood without any words that they had finally found aplace in Moscow where no one would deceive them.
kommersant.com
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