Russia will not agree to the Sakhalin II energy project operator's doubling of its cost estimate to $22 billion, the energy minister said Tuesday according to RIA Novosti.
Under the production sharing agreement behind the massive oil and gas project in Russia's Far East, Russia will only receive profits after the operator, Shell-controlled Sakhalin Energy, has recouped all costs.
Sakhalin Energy's move to double its cost estimate puts off the date by which the government will receive revenue from the project. "We cannot agree to this," Viktor Khristenko said.
The minister said he hoped a decision on the cost estimate would be adopted in the first quarter of 2007.
"If we manage this earlier, that will be laudable," Khristenko said, adding that he had met with the head of Shell Friday to discuss the issue.