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Moscow Times: Shell Rejects Environment Report: Monday, August 28, 2006.

Issue 3484. Page 5.
By Lucian Kim
Bloomberg

The Royal Dutch Shell-led Sakhalin Energy venture rejected a report that it had failed to respond to a list of environmental violations.

The company, which operates the Sakhalin-2 project, has provided the authorities with all the necessary information, Sakhalin Energy spokesman Ivan Chernyakhovsky said in a statement Friday. He was responding to an earlier report by Interfax that Sakhalin Energy had not responded in time to a 2005 violation of water pollution standards.

“The company had informed all relevant regulatory authorities about volumes of water discharged” at its Vityaz production site, Chernyakhovsky said.

The Shell-led project is fighting charges of environmental violations as President Vladimir Putin’s government increases its intervention in Russia’s energy industry. Gazprom wants to acquire at least a 25 percent stake in Sakhalin-2, which is owned entirely by overseas companies and is one of the largest foreign investments in the country.

Sakhalin Energy failed to refute the charge that its Molikpak platform exceeded permitted wastewater volumes, Interfax said, citing the government’s environmental inspectorate on Sakhalin Island.

Chernyakhovsky said Sakhalin Energy had already informed the authorities about wastewater levels. While the Molikpak unit did exceed the water-use license by 9 percent, Chernyakhovsky said, it compensated with much lower volumes at a second unit, the Okha oil storage facility. Overall, the Vityaz site discharged 12.6 percent less wastewater than allowed, he said.

Sakhalin Energy also informed the authorities last year of an excessive concentration of oil products in wastewater, which the company attributed to a possible measurement error, Chernyakhovsky said.

Earlier this month, the Natural Resources Ministry said it would sue to freeze the Sakhalin-2 project because of environmental violations. The project has also come under attack for rising costs in its second phase, which Shell said last year would double to $20 billion.

Sakhalin-2, off the Pacific coast, is building the country’s first liquefied natural gas export terminal. It is 55 percent owned by Shell, 25 percent by Mitsui and 20 percent by Mitsubishi.

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