On Monday, Russia revoked an environmental permit for the Sakhalin-2 project, the largest privately funded energy venture in the world, signalling that work should be halted.

Shell owns a 55-percent stake in the project, and Japanese firms Mitsui and Co and Mitsubishi Corp hold the remainder.

Russian officials complained bitterly after Shell announced a doubling of project costs to 20 billion dollars (15.8 billion euros) last year and say the project is riding roughshod over environmental norms.

Androsov said that the cost projection for the project could be changed, depending on findings made by technical experts.

On Wednesday a spokesman for the project consortium said that work was continuing on the second phase of Sakhalin-2, which is aimed at developing the project's gas infrastructure.

"As we haven't been served any official notice, the construction continues as planned," said the consortium spokesman, Ivan Chernyakhovsky.

Officials said checks needed to obtain a new permit could take six months or more.

Russia's ambassador to Tokyo, Alexander Losyukov, said Russia was interested in the speedy completion of the Sakhalin-2 project and would respect its obligations under an agreement with the Shell-led consortium.

"Russia has no intention of ending or freezing the Sakhalin-2 project," Losyukov was quoted by ITAR-TASS as saying in Tokyo.

"We are interested in the project working fully and in receiving the benefits from it that we are expecting," Losyukov said.

The Russian government's move had provoked a sharp response from Japan, where the country's next prime minister Shinzo Abe told reporters that delays "can have negative effects on Russia-Japan ties in general."

Japan, which is almost entirely dependent on energy imports, had pinned its hopes on oil and gas from Sakhalin to help diversify supplies away from the Middle East.

First deliveries from the Sakhalin-2 project were expected in 2008 and delivery contracts have already been signed with a series of Japanese energy companies.

British officials also expressed concern over the move and EU Energy Commission Andris Piebalgs called on Russia to outline the reasons for withdrawing the environmental permit.

"I believe that they should be clearly and unequivocally identified by the Russian authorities and Shell must be given an appropriate time to resolve them," Piebalgs said Tuesday.

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