Now an economic cold war?

Terry Macalister Gazprom, the Russian gas group, turned up the heat on Shell and intensified a growing international row yesterday by stopping talks over buying a stake in the troubled $20bn (£11bn) Sakhalin project.

The move comes a day after the Russian authorities withdrew Shell's operating permit, sending shock waves through foreign investors. The European commission said it took "very seriously" Russia's decision to revoke Shell's environmental approval for Sakhalin-2, the world's biggest liquefied natural gas project.

Energy is the key issue between the EU and Russia, which supplies a quarter of the EU's oil and gas.

Diplomatic relations with Japan could also be damaged. Two of Japan's largest companies, Mitsui and Mitsubishi, have a combined 45% stake in Sakhalin-2 and the prime minister in waiting, Shinzo Abe, said yesterday that he was concerned that "major delays might have a negative influence on Japan-Russia relations".