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Moscow Times: EBRD Should Not Fund Sakhalin-2, Activists Say

Thursday, March 16, 2006. Issue 3372. Page 5.
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Bloomberg
Royal Dutch Shell and its partners developing a multibillion dollar oil and gas project in the Far East should be denied funding by Eastern Europe's biggest lender because it's causing ecological damage, activists said.
The European Bank for Reconstruction and Development should not give loans as the Sakhalin-2 liquefied natural gas project endangers the island's wildlife, waterways and inhabitants, ecologists including Igor Chestin, chief executive officer of the Russian branch of the World Wildlife Fund, said in Moscow.
Environmentalists maintain the project, whose costs doubled last year and which is now estimated to be worth around $20 billion, threatens the world's last 100 western gray whales by disturbing their feeding grounds.
A decision by the EBRD to fund the Shell-led project may help the venture raise at least $4 billion, the bank and Sakhalin regional authorities have said.
The initial hearing was held on Feb. 28 in London.
If the EBRD balks at providing financing for the venture, which includes Mitsui & Co. and Mitsubishi, it may convince other lenders, such as the Japan Bank for International Cooperation to withhold billions of dollars in loans for the project.
“The EBRD plays a lead role in a group of potential public lenders,” including JBIC and the U.S. Export-Import Bank, the London-based bank said last month on its web site.
The EBRD is holding a series of public consultations on the Sakhalin-2 project. The bank will hold sessions at Sakhalin island, off the Pacific coast, next week and later in Sapporo, Japan.
Work by Sakhalin Energy Investment, the project operator, was not perfect “but much better than a year ago,” said Jeffrey Jeter, an EBRD environment adviser. “We recognize the issues, the company recognizes the issues,” he said. “Our end analysis is that they've been addressed.”
The venture, which was originally supposed to cost $10 billion, is aiming to supply fuel to the United States and Asia. A LNG plant is scheduled to be completed on Sakhalin next year.

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