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UpstreamOnline: EBRD delays Sakhalin 2 loan decision

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By Upstream staff

The European Bank of Reconstruction and Development (EBRD) said today it would not decide whether to extend a key loan to Anglo-Dutch supermajor Shell’s Sakhalin 2 project until it settles a dispute with the Russian government.

Earlier this week Russia suspended the Shell-led Sakhalin Energy Consortium’s environmental permit to proceed with the $20-billion oil and gas project in a move analysts see as part of a Kremlin attempt to gain a stake in the project.

A $7-billion financing package hangs on the EBRD’s decision, which had been expected this month after years of discussions between Sakhalin Energy and the EBRD to ensure the project met the Bank’s environmental rules, Reuters reported.

“Until there is clarity as to the status of the Russian environmental permit there won’t be a decision either way,” EBRD spokesman Anthony Williams said.

EBRD officials are divided on whether the loan should be extended, bank sources said. Some feel the project does not meet the bank’s environmental standards and jeopardises the bank’s reputation. Others feel the bank’s involvement has forced Shell to improve the project, they said.

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