Even in August, a visitor to Sakhalin Island, off the eastern shores of Russia, can detect a chill in the air. The pine and birch forests are still a brilliant green, the sky azure and cloudless, but intimations of the island’s savage Siberian winter are already here. Katerina Lekomtseva, a veteran of 28 such winters, shivers as she stands on a hill above Aniva Bay, on Sakhalin’s southern coast. When Lekomtseva was a child, during the death throes of the Soviet Union, there were constant electricity shortages, and she and her father would sit in the candlelight playing a game called In Town. He would name a city, and she would name another beginning with the last letter of the city he mentioned. After her father, who hadn’t yet given up on the U.S.S.R., would say “Moscow,” Lekomtseva, who had accepted her country’s eventual demise, would counter with “Washington.” Then she would imagine how wonderful Washington must be: no electricity shortages, no candles. “I hated that game,” she tells me.

Lekomtseva’s life has changed vastly since then. At one time, she might have fled to Western Europe—or Washington—in search of a better life. No longer. Lekomtseva now lives in a nice apartment, drives her own car, and wears designer jeans. She works for Sakhalin Energy Investment, and as we stand in the cold wind, she points, cigarette in hand, at her firm’s latest handiwork: a colossal liquefied-natural-gas plant. Its steel tanks and miles of pipes have consumed the weatherworn dachas that used to be here, and it sprawls along the bay like a monument to Russia’s new economic might. In fact, to Lekomtseva, that’s exactly what it is.

“Now you can get strawberries in the wintertime in Sakhalin,” she tells me. “I would sell my motherland for a strawberry.”

Sakhalin Energy has brought a lot more than wintertime strawberries to this far-flung redoubt of the Russian Federation. Among the island’s nearly 600,000 residents, unemployment is at only 1.5 percent. Why? Sakhalin sits above one of the largest hydrocarbon deposits in the world. An estimated 90 trillion cubic feet of untapped natural gas and 12 billion barrels of crude oil lie beneath the ocean floor here. The plant where Lekomtseva works is just one part of an oil and gas project known as Sakhalin II, which is, at more than $20 billion and counting, the largest foreign investment ever made in Russia. Indeed, it’s the most expensive project to produce and transport energy ever undertaken anywhere in the world.

But that investment has recently become a lot less foreign. Not so long ago, the majority stakeholder in Sakhalin Energy was Royal Dutch Shell, the Dutch-British energy giant that secured drilling rights in the 1990s. But in late 2006, Shell agreed to sell a controlling stake to Gazprom, the Russian-state-controlled gas conglomerate, which previously had no involvement. Shell was encouraged to do this, to put it mildly, by the Kremlin. Critics of Russian president Vladimir Putin have decried the sale, calling it a shakedown. U.S. Representative Tom Lantos, a California Democrat who is chairman of the House Committee on Foreign Affairs, says it’s an unfortunate “recentralization of all authority and property” in Russia, though there’s “not very much” the U.S. can do about it. But to the enlightened suits in Moscow, no less than the drillers on Sakhalin, Russian control of Sakhalin II seems only natural. “This is our gas. Why shouldn’t we own it?” asks one well-educated Moscow consultant who trains Russian managers for a large New York-based firm. No doubt it’s a solid argument. But beneath the strident nationalism are pangs of dire necessity: Sakhalin II and projects like it are not just strategically vital; they represent nothing short of the future of Russia’s economy.