This document analyzes factors influencing foreign direct investment (FDI) in Russia's energy sector through two case studies of Western energy companies. The Exxon-led Sakhalin-1 project faced some government pressure but remained majority-owned by Exxon. The Shell-led Sakhalin-2 project lost its majority control after the government accused Shell of environmental violations and increased Gazprom's stake following cost overruns announced by Shell. Political decisions in Russia's strategic energy sector seem to be more concerned with securing energy resources than reputation.