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29

Shell Country Chairman On Shell Operating In Russia

John Barry did not rule out Shell's participation in other projects in Russia

John Barry, the current Shell?s Country Chairman in Russia, who is leaving his post at the moment, gave an interview to Russia?s business daily Kommersant.

Speaking about Shell?s suggestions to raise the estimate of expenditures to $20 billion from $12 billion for the Sakhalin-2 project Mr. Barry said that once they had started extracting on the Sakhalin shelf it became evident that expenditures had to be increased. Mr. Barry also mentioned external reasons for the rise such as general price hikes on the raw materials market. ?Sakhalin-2 is a long-term project, therefore changes during its implemented has a great effect on expenses.? The head of Shell?s Russian unit reported that the company had sent on September 15 the project?s new draft budget to the Government to be considered by the task force of the advisory board on October 26.

Mr. Barry also breached the exchange of 50-percent stake in Sakhalin-2 with Gazprom for the Zapolyarnoye-neokom company in connection with the rise in expenditures. He said the company had to announce an increase in expenditures on Sakhalin-2 a week after they had signed the memorandum of agreement with Gazprom since rules on the disclosure of information on international stock exchanges bound them to. Under the agreement with Gazprom, Shell is now to check the assets to be exchanged.

John Barry did not rule out Shell?s participation in other projects in Russia and called the Western Siberia a very promising region.