So far it has been a bad week for Shell with the news that Russia has wrestled a majority controlling stake in its Sakhalin-2 project. Now it turns out the costs of the project have increased by a cool $5 billion to $25 billion.
The company is blaming a “campaign of harassment by the Russian Government” for the increase. Progress on the project has been delayed by harassment that includes refusal of drilling permits and visas and the “bullying” of Shell staff. Drilling at Lunskoye, a huge offshore gasfield, has been delayed for over two months as Sakhalin Energy waits for a permit from RosPrirodNadzor, an environmental agency.
Foreign workers in Sakhalin are being prosecuted for visa violations. About 600 are being targeted and several have appeared in court to pay fines. Expatriates are becoming fearful and concerned that the visa infractions leave them with criminal records that allow the Government to revoke work permits at any time. Some staff have been told to leave, while others have stayed but cannot work.