Royal Dutch Shell Plc  .com Rotating Header Image EBRD urged to refuse finance to Sakhalin oil project

Russian activists have stepped up pressure on the European Bank for Reconstruction and Development to refrain from financing an expansion of the Shell-led Sakhalin oil and gas project in Russia's far east.
At a six-hour consultation meeting in Moscow last Tuesday, lawyers, environmentalists, geologists and community leaders said the Sakhalin II project did not merit the EBRD's symbolically important blessing.
“We are now in a situation where the company is violating the law from all possible aspects,” said the deputy head of the Rodnik non-governmental legal centre, Irina Saveleva, referring to Shell. “There is no reason for this project, in its current form, to receive funding from the EBRD because what is being done contradicts all its ecological declarations and principles,” Saveleva said.
Located on the island of Sakhalin, 40 kilometres (25 miles) from Japan's coast, the project would expand existing facilities and lay pipelines that will supply a Liquefied Natural Gas plant under construction as well as an oil export terminal in the south of the island.
Sakhalin II is key to the development plans of Anglo-Dutch giant Shell and has a projected 20 billion-dollar (16.4-billion-euro) price tag. It is estimated that 1.0 billion barrels of oil can be recovered as well as 500 billion cubic meters of gas.
The project's managers have insisted that they are in compliance with Russian law and are addressing environmental concerns.
But at last week's meeting called by the EBRD before it takes a decision on whether to finance the project, activists said it threatened precious species such as the western grey whale, which has its summer feeding ground in the area, as well as salmon that use the island's waterways for spawning.
Activists in particular pointed to the seismic instability of the area.
Rodnik accused Shell of denying the public full information on its work as well as other procedural violations and said the group would launch a new legal case against the company following previous such cases.
“While recognising the rights of groups to take issues to the courts, we are confident that we will be found to be complying with the law,” said an official at Sakhalin Energy, which is managing the project.
However, the Russian branch of the international environmental group WWF backed Rodnik's opposition.
“The WWF urges the EBRD and other banks not to consider the possible financing of the Shell project for as long as the company has not presented convincing proof that it has revised the project and has paid compensation for damage it has already caused to the environment,” the WWF said Wednesday.
The gathering last week was part of a 120-day consultation period established by the EBRD, which lent funds for the first phase of the Sakhalin project.
Consultations have already taken place in London and are to continue with meetings in Sakhalin itself and on the Japanese island of Hokkaido.
EBRD President Jean Lemierre said earlier that a decision on whether to part-finance Sakhalin II would probably occur “before the summer”.
Shell has a 55-percent stake in the Sakhalin Energy Investment Company while Japanese firms Mitsui and Mitsubishi own 25 percent and 20 percent respectively.
But Shell has signed a memorandum of understanding with Russian gas giant Gazprom to swap 25 percent of shares for half of a Siberian field.
Founded in 1991 to assist the transition of former communist nations to market economies, the EBRD operates in 27 countries from central Europe to Central Asia, including Uzbekistan. — AFP

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