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Sakhalin’s treasures

Planet Porto Alegre (Brazil): Sakhalin’s treasures

14 May 2005

Shell wants the oil from the Russian Seas. Environmentalists denounce the risk of extinction regarding the Pacific Gray Whales

By Tiago Soares

Sakhalin Island is located in Western Russia. It is closer to Tokyo than to Moscow. This small island has been a reason of dispute between Russians and Japanese for centuries. Every year, between May and October, when the water is not frozen, gray whales go there seeking for food. In this part of the ocean there is not only a lot of fish- there are also natural oil deposits only comparable to the ones in the Middle East. Although the oil is not important to the gray whales, it does attract other terrible “predators” like Royal Dutch/Shell.

Environmentalists have accused Shell’s polemic gas and oil extraction project on the Sakhalin coast of putting Pacific Gray whales at risk of extinction. This specimen, also called “Korean Okhotsk”, that can weight about 40 tons and reach 45,93 feet, is one of the biggest victims of the voracious fishing industry. Today there are only about a hundred of those whales all over the world.

Shell’s initiative is pointed out by scientists and civil rights organizations as harmful to the ecological balance. The company’s main financial supporter, the Credit Suisse First Boston has also become a target to environmentalists, which state that damages caused by Shell’s initiatives go against the Ecuador Principles – a framework of environmental policies adopted by dozens of private banks financing projects.

Desperate for oil

In 1994, together with the Japanese Mitsubishi and Mitsui, Shell founded the Sakhalin Energy Investment Company. Idealized to explore gas and oil in the seas of the Sakhalin Island, the company did not take long to sign an agreement with Moscow in which they compromised to share part of their profits with the Russian government.

The Sakhalin II Project, as it is called, cannot be considered a modest one. It is comprised by 3 offshore platforms for gas and oil production, giant oil and gas pipelines and a liquefied natural gas factory. The cost of the project is supposed to reach US$ 12 billion, which is enough to define it as the most expensive project on gas and oil exploitation in course in the world.

Sakhalin Energy has been exploring oil through the Molipak platform since 1999. Although the platform has a considerable production (about 11,6 million oil barrels in 2004), exported for countries like Japan, Korea, China and the US, its activity is limited to the periods when the oceans are not frozen and oil ships can board in the oil supply directly at the platform.

Megalomaniac disaster

In order to optimize its production and guarantee there will be oil throughout the year, Shell intends to build a new exploitation platform and oil and gas pipelines of about 800 km each, all around the Sakhalin Island. The pipelines will take the new platform’s production to a gas refinery (which is also under construction) located north of the island. The construction of a third platform near Korea is also intended.  

This plan, which is perfect for the company, has drawn the environmentalist’s attention in 2004 – that is because, according to Shell’s plans, not only the Sakhalin platform but also the oil and gas pipelines would be built in a very sensible environment, vulnerable to seismic activity – which increases the risks of oil leakage.  

If that was not enough, there are also the damages caused by the noise and wasting of material typical to this kind of structure. Those factors will be certainly fatal to the gray whales that migrate to this region every year.

Brought to the public eyes by the British publication The Observer in January 2004, Shell’s plans have drawn the civil society’s attention. Hard-pressed by NGOs and scientists, the company asked the IUCN (The World Conservation Union) a study analyzing the possible environmental impacts caused by the project. The results were devastating: the IUCN not only suggested Shell should abort the Sakhalin II project but also accused the company of denying scientists the access to information.

“Shell’s Sakhalin II project increases the critically endangered gray whales’ risk of extinction through construction and operation impacts including ship collisions, oil spills, and noise,” stated the IUCN report. Environmentalist estimate the death of a female per year would be sufficient to drive the population towards extinction.

Listening with a merchant’s ear

As an attempt to demonstrate a reaction to the IUCN warning, Shell communicated last March the 30th their intention to change the pipelines’ location, which, then, would stay far away from the whales’ habitat. However, environmentalists find Shell’s initiative nothing but a smoke curtain. The NGO Friends of Earth communicated on the same day that even with the pipelines relocation “…unless Shell moves the oil drilling platform, the future of the western grey whale is still in serious jeopardy.” The NGO also pointed out that “The project has also been criticized for the lack of key safety information available, as Shell has not yet provided an oil spill response plan.”

To make things even worse for Shell, the British newspaper The Guardian informed last April 3rd that soon after the decision was announced, Sakhalin islanders found huge amounts of debris that appeared to have been dumped by the company’s sub-contractors in a shallow bay crucial to the island’s vital fishing industry. Due to Sakhalin’s low development rates, the island has fishing as one of the main economical activities.

After money

It is understandable for Shell to be reticent about the changes in the Sakhalin II Project. After all, according to the Sakhalin Energy website, 50% of the project would have already been built, meaning a lot of money has been invested. The Transnational, which is facing a difficult financial situation, bets its future in the initiative’s success – it is estimated that once the project is completed the company’s profits will reach about US$ 45 billion.

To Shell’s desperation, the publicity on the case does not help the financing of the Sakhalin Project. Although the company can count on the support of private sector’s Credit Suisse First Boston (CSFB), most of the private and multilateral finance groups have been avoiding the attachment of their names to the name of Sakhalin Energy. Even the CFSB has been a target of hard-pressure throughout the world by entities like the Greenpeace, Friends of The Earth, Banktrack, Rainforest Action Network and Pacific Environment.

Aloof from it all, pacific Gray Whales that have survived harpoons and were once believed extinct, are again swimming towards their end. They are now facing a different predator, a merciless one that takes away everything: the human greed for oil.

Sources:

Sakhalin Energy, website official – Sakhalin Energy relocates offshore pipelines to protect whales

http://www.sakhalinenergy.com/

Pacific Environment – IUCN Report: Shell Officially Warned

http://www.pacificenvironment.org/russia/NGOpressieIUCNreport_16feb05.html

Pacific Environment – Big Oil and the brink of extinction

http://www.pacificenvironment.org/russia/sakhalin.htm

Banktrack – CSFB shamed for funding whale extinction

http://banktrack.org/

The Guardian – Shell moves Sakhalin pipeline but faces new destruction row

http://observer.guardian.co.uk/business/story/0,,1450966,00.html

Znet – Indigenous Russians unite against oil and gas development

http://www.zmag.org/content/showarticle.cfm?SectionID=31&ItemID=7618

Friends of the Earth – Shell’s new Sakhalin pipeline route still puts whales at risk

http://www.foe.co.uk/resource/press_releases/shells_new_sakhalin_ii_pip_31032005.html

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