Case 321 - Gazprom's Grab for Sakhalin-II

Rotnem, Thomas E.

In 1994 the Russian Federation signed a production sharing agreement with a consortium of Dutch, Japanese, and American corporations to develop major oil and gas reserves on Sakhalin Island. This case study examines Moscow’s 2006 expropriation of Sakhalin-II, as the project is known, by Gazprom, a state-owned company. (A sister project, known as Sakhalin-I, has not encountered such difficulties.) After detailing the crisis that pitted the Russian government against the Royal Dutch Shell-directed energy consortium, the study puts forth several competing theories to explain Moscow’s motives. It is designed to engage students in an analysis and discussion of what this case portends for the future of Russian economic and political reform, as well as Moscow’s role in world affairs.