The European Bank for Reconstruction and Development has abandoned work on a $300m loan for the controversial $20bn Sakhalin-2 energy project in Russia's far east following the scheme's de facto nationalisation by the Kremlin.

The multilateral bank announced yesterday it would no longer pursue the financing package it had been considering for the past five years after Gazprom, the Russian state-controlled gas group, acquired majority ownership from a consortium headed by Royal Dutch Shell.