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Interfax: Russian Authorities Revoke Subcontractor License

Russian water protection authorities have suspended licenses from a subcontractor of the Shell-led liquefied natural gas project Sakhalin-2.

The company, Starstroi, has two months to correct violations or will see its 12 licenses annulled, Interfax cited the Natural Resources Ministry as saying.

Niether the Ministry nor Shell representatives were immediately available for comment.

The move was the latest in a steady flow of charges from Russian officials, who have threatened since this summer to pull key permits at the Sakhalin-2 development and hit it with economic sanctions.

Observers, however, contend that the attention is aimed at pressuring Shell to secure more favorable terms for state-controlled gas monopoly OAO Gazprom to join the project, and comes as the Kremlin is increasing its role in the lucrative energy sector.

Shell enraged the Kremlin at the end of last year when it announced that the cost of the project would double to $22 billion. Russian officials have yet to approve the costs, which under the terms of Shell's original agreement must be paid in full before Russia can receive a share of the profits.

The Sakhalin Energy consortium is 55% controlled by Shell.

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