Operations of Royal Dutch / Shell in Russia include a strategic alliance with Gazprom, the country’s natural gas monopoly, the development of Salym oil fields in Siberia, and a small retail refilling network in St. Petersburg. Focuses on the Sakhalin II project. Sakhalin II is the reason for the existence of Sakhalin Energy Investment Company (SEIC), followed by Royal Dutch / Shell (55%), Mitsui part (25%) and Mitsubishi (20%). Worth about $ 10 billion, would be the second phase of Sakhalin II … Read more »

Operations of Royal Dutch / Shell in Russia include a strategic alliance with Gazprom, the country’s natural gas monopoly, the development of Salym oil fields in Siberia, and a small retail refilling network in St. Petersburg. Focuses on the Sakhalin II project. Sakhalin II is the reason for the existence of Sakhalin Energy Investment Company (SEIC), followed by Royal Dutch / Shell (55%), Mitsui part (25%) and Mitsubishi (20%). Worth about $ 10 billion would be the second phase of Sakhalin II be the biggest investment decision in the history of the Royal Dutch / Shell, as well as the largest foreign direct investment in the history of Russia. Sakhalin II would be the largest integrated oil and gas project in the world. The project, however, with a number of challenges, however. A Production Sharing Agreement (PSA) – a trade agreement between the foreign investor and a host government that replaced the country’s tax and royalty regime for the duration of the project – regulates Sakhalin II Although Sakhalin II PSA enjoys the status of Russian law, other Russian laws contrary to the provisions of the PSA. PSA have been controversial even within Russia. After several years of waiting in vain for “legal stability” Shell and SEIC leaders must decide whether the project to go forward.
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from
Rawi Abdelal
Source: HBS Premier Case Collection
27 pages.
Release Date: 24, March 2004. Prod #: 704040-PDF-ENG
Journey to Sakhalin: Royal Dutch / Shell in Russia (A) HBR case solution

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