5/17/07
Sakhalin Island is what international oilmen might call a "hardship post." It is on the very edge of the Russian Far East, the historic equivalent of America's Wild West. The narrow, 600-mile-long island is populated by only half a million people, and its seasons are severe even by Russian standards. But underneath the surface of the island and the surrounding seas is enough oil and gas to power the United States for as much as a decade. Ten years ago, energy giants Royal Dutch Shell, ExxonMobil and other multinationals negotiated contracts with a Russian government hard up for cash and eager for foreign investment. Deals were made to extract Sakhalin's oil and gas for export to markets from Shanghai to San Diego. Moscow was promised a cut of the profits once the projects got out of the red. Sakhalin Island Then the protests started ... over environmental damage, public health and the rights of indigenous peoples. For the most part, Moscow stayed out of the fray. But then, in 2006, with construction nearing completion on Shell's Sakhalin 2, the world's largest oil and gas project, the Kremlin intervened. The project was shut down, and the Russian national gas company, Gazprom, maneuvered to take it over. Some energy experts viewed it as a nationalist takeover under the guise of environmental protection.moreless