Monday September 4th, 2006 / 18h39
LONDON -(Dow Jones)- A decision by the European Bank for Reconstruction and Development to lend money to the Royal Dutch Shell PLC (RDSB.LN)-led Sakhalin II project won’t take place before October, an EBRD spokesman said Monday.
The bank has previously set a deadline for September but the spokesman said the date was for a recommendation to the board, which he still expects in September.
The board would still then have 30 days to make a decision on the loan for the oil and gas venture on Russia’s Pacific coast, a debt which people involved in the talks say would be in the region of $500 million.
The spokesman added that any decision on the loan will not be affected by recent threats by Russian environmental authorities to suspend production at the project.
Russian authorities said Friday they may order the project to stop pumping oil if it does not correct environmental violations registered over the past year.
“We have our own process,” separate from the Russian authorities, to assess the environmental soundness of the project, the EBRD spokesman said.
A person familiar with the EBRD’s process said that unless permits to build or operate the project are canceled, the bank will still assess Sakhalin II using its own criteria.
The person added that the EBRD has noticed some improvement regarding the most critical issue, the impact of the project on river crossings. But the person added that the bank is still negotiating with the company to get commitments to alleviate pollution risks.
Sakhalin Energy currently pumps about 80,000 barrels a day of crude oil, and plans to start shipping liquefied natural gas, or LNG, to East Asian and North American markets starting in 2008.
The Sakhalin Energy consortium is majority owned by Shell, while a subsidiary of Japan’s Mitsui & Co. Ltd. (MITSY) holds a 25% stake and Diamond Gas Sakhalin, a subsidiary of Japan’s Mitsubishi Corp. (8058.TO), holds 20%.
-By Benoit Faucon, Dow Jones Newswires; +44 20 7842 9266; [email protected]
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