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#28 - JRL 2006-232 - JRL Home
Stepashin Says Sakhalin Issues Should Be Resolved at Negotiating Table

MOSCOW. Oct 13 (Interfax) - Disputes that have arisen during the implementation of Sakhalin-1 and Sakhalin-2 projects should be resolved at the negotiating table, Russian Audit Chamber Director Sergei Stepashin.

"An economic, and not a political, discussion should be held on the agreement," he told journalists on Friday.

Stepashin said that the Sakhalin-1 and Sakhalin-2 agreements were signed during a difficult economic period for Russia, and as a consequence they are not currently in Russia's interest.

"When a political decision was reached on these projects, there was no money in the country, there was galloping inflation and it was necessary to somehow support the oil and gas industry. This was a political decision. From an economic point of view it is totally obvious that this was not advantageous, but we are obliged to observe signed international agreements," he said.

At the same time Stepashin stressed that there is a possibility of resolving disputes at the negotiating table, particularly regarding an increase in Sakhalin-2 expenditure by almost 100% to $20 billion. "If the budget in the agreement is exceeded, this needs to be considered. Let's observe the agreement. Let's invite domestic companies, if you cannot cover the growing costs independently," he said.

Stepashin also said that the Russian Audit Chamber has approached its counterparts in Britain and Japan with a proposal to carry out a joint evaluation of the project.