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BBC News: UK to decide on Sakhalin funding

BBC News: UK to decide on Sakhalin funding

A $20bn oil and gas project in Russia faces a crucial funding decision amid running concerns over its effect on the endangered western Pacific gray whale.”

Tuesday, 4 October 2005

By Paul Rincon: BBC News science reporter

A $20bn oil and gas project in Russia faces a crucial funding decision amid running concerns over its effect on the endangered western Pacific gray whale.

On Friday, officials will meet to discuss whether the UK Export Credit Guarantee Department should finance Shell’s project in Russia’s far east.

A gray whale feeding ground lies 7km from the site of an oil platform.

Some groups say it may take very little to drive the whales – which now number about 100 animals – to extinction.

Sakhalin, a former Tsarist penal colony, has vast reserves of oil and gas.

Shell is developing two fields which, together, contain recoverable volumes of over one billion barrels of crude oil and more than 500 billion cubic metres of natural gas.

Phase one of the project has already gone into seasonal production, while phase two is still being developed.

The Worldwide Fund for Nature (WWF) has slammed Shell – which leads the Sakhalin Energy consortium operating the project – on its decision to push ahead and install the platform for its Sakhalin phase two oil and gas project this summer.

The conservation group said it should have adequately addressed the issues of noise, collision risks and oil spills before doing so.

“WWF cannot see how the government can approve funding of this project when the world’s experts have clearly identified areas where these critically endangered whales were exposed to unnecessary risks,” said Robert Napier, WWF’s chief executive.

In the pipeline

The oil giant has stressed that it is committed to conserving the whale population and has already made major concessions.

These include changing the route of its oil and gas pipelines and agreeing to fund a long-term expert panel to monitor the whales.

The latter point was cemented last month at a meeting with experts and conservationists in Vancouver, Canada, organised to evaluate the consortium’s response to recommendations on protecting the whales.

In their report from Vancouver, the experts wrote: “The approach taken to date has not always been suitably or consistently precautionary.”

It added that the project’s construction timeline “precluded adequate review of risks and noise criteria”. But the experts also said there was uncertainty over how noise might affect the whales.

A spokesman for Sakhalin Energy told the BBC News website that – weather permitting – observation data had shown “no discernible change in the feeding behaviour of the western gray whales throughout the operation”.

Collision watch

WWF also claims the oil giant failed to use effective measures for avoiding collisions with the whales during installation.

James Leaton, the conservation group’s extractive industries policy officer, said that observers on boats were hampered by the foggy conditions during installation of the platform.

But the spokesman for the oil and gas consortium disputed that the whales were placed in danger.

“You tend to form corridors away from the whale feeding areas and known migratory routes. So shipping tends to use those lanes and that’s another way of minimising the possible risk of collision,” he said.

Experts at the Vancouver meeting have tasked Sakhalin Energy with delivering a comprehensive plan for dealing with oil spills.

The waters around Sakhalin freeze over for about six months of the year and WWF regard a spill under the ice as potentially disastrous.

The European Bank for Reconstruction and Development (EBRD) is shortly expected to decide whether to lend money to the project.

The EBRD is mandated to promote environmentally sound and sustainable development through its investments. Its involvement is vital to the project as it will persuade other banks to lend money.

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