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. Last Updated: 07/27/2016

Mitvol Says 'Banana Republic' Days Are Over

NEW YORK -- Major oil companies interested in Russia's production should recognize that the days of "the Banana Republic" are over, deputy head of the Natural Resources Ministry's environmental watchdog, Oleg Mitvol, said Tuesday at the start of a week of meetings with U.S. investors.

Foreign oil companies can no longer cut regulatory deals to enter the country, Mitvol, deputy head of the Federal Service for the Inspection of Natural Resources Use, said in an interview. "Those times are a thing of the past."

Shell's Sakhalin-2 project shows how a foreign company can run afoul of the changes occurring in the country, Mitvol said.

"Shell was hurt by its own arrogance," said Mitvol, who describes himself as outspoken and blunt. "The company failed to understand the changes that have taken place."

Shell ceded control of Sakhalin-2 last year to Gazprom after months of pressure from environmental regulators.

Spokesmen for Shell in London and Houston did not return phone calls seeking a response to Mitvol's comments.

Mitvol is in the United States this week to meet with investors from Capital Research & Management, American Century Investments, Fidelity Investments, UBS, State Street and Wells Capital Management. He is being accompanied by Igor Maidanov, director of the Natural Resources Ministry's department for international cooperation.