Oil giants and Russia are starting to enter in a legal row over oil & gas permits worth $ 80 billion.
Multinational oil companies and oil-rich nation Russia are planning to take the legal way to sort out the issues regarding $ 80 billion oil & gas licenses.
As per Sergei Fyodorov of Russian ministry for natural resources, Russian Govt. may withdraw Exxon Mobil's license for offshore project of Sakhalin 1 as the expenses will increase by 20 % to $ 16.8 billion which signifies reduction in profits for Russia.
He said that govt. lawyers have advised the withdrawal of license of Exxon. PSA (production sharing agreement) for Kharyaga oil field with Total could also be cancelled because of slow development.
Recently, the govt. made the news for not giving environmental approvals for Sakhalin 2, a natural gas PSA project led by oil giant Shell along with Japanese firms Mitsui & Mitsubishi.
Ministry is blaming PSAs for not making sufficient revenue from taxes. Fyodorov said annual tax generation from Sakhalin 2 alone could touch $ 400 million but Russia receives only $ 20 million as royalty. Gazprom, Russian oil giant also wish to become a major partner in PSA projects. However, neither Sakhalin 2 nor Kharyaga involve any of the main oil companies in Russia.
The oil companies from the west are looking for legal & diplomatic ways to force Russia to review the PSA agreements, which were signed in 1990s.
"At that time, the inexperience of govt. & low oil prices led to hassle-free signing of PSA agreements. However, the time has changed. Russia has emerged as a major exporter of energy resources and earlier US accusations on Russia for blackmailing and intimidating other nations seem true to some extent," said an analyst at RNCOS.
Craig Stevens, a spokesman for US Energy Department was optimistic that Russia & these companies soon reach an agreement that also values the 'rule of law' and Russia should not develop an image that might see it going against foreign investments.
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