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Gulf Times: Shell loses appeal to restore LNG jetty approval

Gulf Times: Shell loses appeal to restore LNG jetty approval

“The Royal Dutch Shell Plc-led venture on Russia’s Sakhalin Island may face delays on plans to sell liquefied natural gas to Asia after losing an appeal to reinstate an environmental approval”: “Talks with the European Bank of Reconstruction and Development about funding for the project stalled after the bank found environmental problems”

Sunday, 31 July, 2005

By Torrey Clark

MOSCOW: The Royal Dutch Shell Plc-led venture on Russia’s Sakhalin Island may face delays on plans to sell liquefied natural gas to Asia after losing an appeal to reinstate an environmental approval, ecologists said.

The Yuzhno-Sakhalinsk court earlier this week upheld a previous decision that annulled a favourable environmental impact review for a temporary jetty built by Sakhalin Energy Investment Co, the project operator, California-based Pacific Environment has said in an e-mailed statement.

The project is endangering the environment in a bay where a quarter of the salmon caught on Sakhalin Island live, the ecologists said.

Shell said on July 14 that development costs may double for the current stage of the Sakhalin-2 project to $20bn and that exports of LNG would be delayed to mid-2008 from the end of 2007. This stage includes building a 9.6mn-tonne-a-year plant to supercool natural gas to a liquid for transportation by tanker. “This court decision may cause additional delays in LNG deliveries to prospective buyers,’’ Pacific Environmental said.

The Sakhalin court’s decision concerns only a temporary jetty used to import equipment and materials to build the LNG plant, Sakhalin Energy spokesman Ivan Chernyakhovsky said in a telephone interview on Friday. It doesn’t affect a permanent jetty that is being built to load tankers, he said.

It is too early to say whether the ruling could delay construction of the LNG plant, Chernyakhovsky said. He declined to comment on the court ruling, saying the company hadn’t received written notification yet.

President Vladimir Putin criticised environmental groups for using ecological issues to “attack’’ projects important for Russia’s economy, according to a transcription of a July 20 meeting with civil society groups posted on the Kremlin’s website. “Ecological impact reviews shouldn’t hinder the development of the country and the economy,’’ Putin said.

The design, procurement and construction of the LNG plant is about 65% completed, Sakhalin Energy said in a statement two weeks ago.

Talks with the European Bank of Reconstruction and Development about funding for the project stalled after the bank found environmental problems, EBRD spokesman Richard Wallis said in June. – Bloomberg

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