Royal Dutch Shell Resolves Environmental Snag at Sakhalin-2

Includes: BP, RDS.A
by: Judith Levy

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Shell CEO Says Sakhalin Issues Fully Addressed [Reuters]

Summary: Royal Dutch Shell, which recently had its environmental permit abruptly revoked by the Kremlin for its Sakhalin-2 liquified natural gas [LNG] project, announced that it has resolved the Russian government's concerns. Though some analysts claim the environmental concern was manufactured by the Russian government to constrain foreign involvement in the country's strategic energy sector, RDS CEO Jeroen van der Veer conceded that there were "significant environmental challenges" that have been "fully and transparently addressed." Sakhalin-2, which is 80% complete, will be one of the largest LNG producers in the world, and is expected to begin supplying Asian and American customers by mid-2008. Meanwhile, Russia's gas monopoly Gazprom, which agreed last year to acquire 25% of Sakhalin-2, has balked due to a doubling of project costs to $20 billion.
Related links: With Royal Dutch Shell, Size Really MattersRussian Government Muscling In on Anglo-Russian Gas Field Venture
Potentially impacted stocks and ETFs: Royal Dutch Shell plc (NYSE:RDS.A), BP PLC (NYSE:BP) • iShares S&P Global Energy Sector Index Fund (NYSEARCA:IXC), Vanguard Energy ETF (NYSEARCA:VDE)

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