By Alex Nicholson
AP Business Writer

MOSCOW — Russian regulators have delayed the start of drilling at the giant Sakhalin-2 liquefied natural gas development, an official with the Shell-led operating company said Dec. 13, as state pressure mounts on the biggest foreign investment in Russia.

The Natural Resources Ministry has probed the $22 billion project off the Far Eastern island of Sakhalin since the summer, in what analysts say is an attempt to pressure Royal Dutch Shell PLC to hand over control to natural gas monopoly OAO Gazprom as part of a broader Kremlin drive for dominance in the energy sector.

The company has not received permission.

Igor Ignatyev, vice president for corporate affairs with Sakhalin Energy, said the company had not received permission from Russia's environmental watchdog agency to start drilling at the offshore Lunskoye gas field, in remarks confirmed by Sakhalin Energy spokesman Ivan Chernyakhovsky. That means a January start date would have to be put back.

“As a company we require cooperation from regulators to deliver successfully and on schedule,” Chernyakhovsky told The Associated Press.

The company is due to deliver its first LNG in 2008. Chernyakhovsky declined to say if the company could miss this date due to the failure to receive drilling permission.

Almost all the gas at Sakhalin-2 has been sold to buyers in Japan, South Korea and North America.

Oleg Mitvol, the deputy head of environmental watchdog Rosprirodnadzor, said that Sakhalin Energy had failed to provide the necessary documents for the drilling permit, the RIA-Novosti news agency reported. As soon as they were submitted, it would take the agency a month to review them, Mitvol said, according to the report.

Gazprom's board Chairman Dmitry Medvedev said Dec. 12 that a deal could soon be reached for the monopoly to join the project after Shell chief executive Jeroen van der Veer made a number of proposals in early December on the Russian company's entry.

Shell currently holds a 55 percent stake, while Japanese companies Mitsui & Co. and Mitsubishi Corp., hold 25 percent and 20 percent stakes, respectively.

While observers have said that Gazprom aims to control the project, Medvedev said that the company would not necessarily demand more than a 50 percent stake.

Any stake would likely be paid for through an agreement that would see the consortium keep revenues from the project's sale of liquefied natural gas that would otherwise go to Gazprom, Dow Jones Newswires reported, citing the Prime-Tass agency.

Despite reports that a deal is imminent, there has been no letup from environmental regulators.

On Dec. 12, the deputy head of Rosprirodnadzor estimated the environmental damage from the project to be $10 billion and promised to begin legal action next year against the consortium in Russia and abroad.