Sakhalin-II in the Firing Line

State Control, Environmental Impacts and the Future of Foreign Investment in Russia's Oil and Gas Industry

Author(s): Michael Bradshaw
Editor(s): Matthias Neumann, Robert Orttung, Jeronim Perovic, Heiko Pleines, Hans-Henning Schröder
Series: Russian Analytical Digest (RAD)
Issue: 8
Pages: 6-11
Publisher(s): Center for Security Studies (CSS), ETH Zurich; Research Centre for East European Studies, University of Bremen
Publication Year: 2006

The world's largest private oil and gas companies are working offshore of Sakhalin Island in Russia's Far East to develop a new oil and gas province. The Sea of Okhotsk has the potential to become another North Sea, located next door to Asia's energy-hungry economies. Now that the projects are starting to realize their potential, the Kremlin has decided that it wants a greater share of the benefits and is using administrative leverage to pressure the foreign companies into renegotiating the terms of their involvement. These actions have prompted widespread condemnation in Japan, Europe and the United States and added to the growing concerns about Russia's reliability as an energy partner following the gas dispute with Ukraine in January.

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