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Houston Chronicle: Russia Watchdog Seeks to Halt Project

Sept. 28, 2006, 11:23AM
By ALEX NICHOLSON AP Business Writer
© 2006 The Associated Press

MOSCOW — Russia’s environmental watchdog called Thursday for pipe-laying work to be halted at a Royal Dutch Shell PLC-led project on Russia’s Far Eastern Sakhalin island even as the country’s foreign minister said any problems could be resolved through dialogue.

“We want criminal cases for every destroyed tree or damaged river,” Oleg Mitvol, the deputy head of Rosprirodnadzor said, according to the Interfax news agency. “If the criminal cases are opened for everything, the company will read the Criminal Code, come to its senses and stop the barbaric activity,”

Still, Russian Foreign Minister Sergey Lavrov said environmental concerns threatening to halt work on the $20 billion Sakhalin-2 liquefied natural gas project could be resolved.

“I am convinced that a dialogue with the relevant Russian government agencies … will allow these issues to be settled,” Lavrov said in televised remarks.

Russia’s Natural Resources Ministry has opened a full environmental review of the project and given Sakhalin Energy until the end of October to show that it can correct a range of alleged environmental violations and save the work from being frozen.

On Wednesday, Mitvol estimated the environmental damage at $50 billion. On Thursday, however, he listed instances of illegal logging on pipeline routes worth just $1 million.

The Natural Resources Ministry contends that Sakhalin Energy is illegally felling trees and has silted up streams and rivers with its pipe-laying work. Officials from the company have admitted problems with some contractors laying the pipes, but insist they are working within the law.

Observers have suggested that the environmental probe is aimed at securing better conditions for state gas monopoly OAO Gazprom, which is negotiating to join the project.

On Wednesday Lavrov called those allegations “groundless,” while Sakhalin Energy’s CEO Ian Craig said it was “highly unlikely” that work would be interrupted.

Royal Dutch Shell PLC controls 55 percent of Sakhalin energy, while Japan’s Mitsui & Co. and Mitsubishi Corp. have 25 percent and 20 percent, respectively.

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