Royal Dutch Shell , Gazprom and their Japanese partners have agreed to pay a fixed annual dividend to Russia as part of their new Sakhalin-2 deal, an industry source said on Thursday, according to Reuters.
"It will amount to a few hundred million dollars a year during the first years and then depend on the oil price," the source told Reuters.
The comment followed an article in the Wall Street Journal on Thursday, which quoted a source familiar with the deal as saying the dividend will amount to under a billion dollars every year and that payments will start in 2010.
"My understanding is that the payment will be done on a pro-rata basis by all shareholders," the source told Reuters.
Shell used to lead the $21.4 billion Sakhalin project, which also includes Mitsui and Mitsubishi Corp.
Last year, the partners agreed to sell half the project to Russia's gas export monopoly Gazprom for $7.45 billion after months of pressure from Russian ecological authorities, who threatened to suspend the project.
It is due to start large shipments to Japan and South Korea next year.
The acquisition of control in the production sharing deal (PSA) was interpreted as yet another Kremlin victory in its drive to tighten the grip over the economy.
Some analysts have, however, said the Sakhalin PSA that Shell negotiated in the 1990s offered the world's second-largest, non-state controlled oil company more favourable terms than most other nations had agreed in the past decade.
Under the renegotiated deal Shell and the Japanese firms had also agreed that over $3 billion of their costs would not be redeemed by Russia despite the fact that all initial costs should in theory be covered under the PSA, sources said last year.
The new annual dividend clause will be yet another blow to the project, although of a much smaller scale.
Shell declined to confirm that a deal on a new fixed annual dividend had been reached, but said some terms had changed.
"There have been minor adjustments to the fiscal terms that - while keeping the PSA intact - have given the Russian Federation government more access to revenues when oil and gas prices are high and have taken into account the government views on cost recovery allowances," Shell's spokesman in Moscow, Maxim Shub, told Reuters.
"There is no material impact on the value of Sakhalin-2 for Shell as a result of these changes," said Shub.
A renegotiation of the PSA would have been a complex legal matter and the Wall Street Journal said the dividend allowed the terms to be changed without such complications.
(Reuters, 26/04/2007)