Substandard contruction work has caused a consortium led by Royal Dutch Shell PLC to suspend pipe-laying work at a mudslide-prone mountainous section of its giant liquefied natural gas project, called Sakhalin-2, on Russia's far eastern island of Sakhalin.
The halt on work is not expected to push back the project's completion date. About 870 miles of the final combined length of 1,000 miles of oil and gas pipelines have already been welded.
Monitoring by the company revealed "isolated examples of subcontractors not maintaining certain standards ... This is not acceptable to the company, therefore we have suspended work in certain areas within the Makarov mountain range."
Russia's Natural Resources Ministry is auditing the project and called for construction to be halted over mudslide concerns earlier in the month. The ministry's attention might be aimed at pressuring Shell to offer OAO Gazprom, a state-controlled gas monopoly, better terms as it jostles to join what will be the world's biggest LNG development.
Gazprom is asking for a 25 percent-lus one share stake in Sakhalin-2 in exchange for giving Shell access to the far northern Zapolyarnoye-Neocomian field, the world's fifth-largest gas deposit.
Last July, Shell said the expected cost of developing Sakhalin-2 had doubled to around $20 billion due to currency swings and rising prices of commodities such as steel.
Gazprom wants to reduce the assets it's offering in the swap deal as the cost increase has diminished the value of the stake it wants.
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