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RIA Novosti: Sakhalin II pipeline must be closed – ecology official

16:34 | 28/ 09/ 2006 

YUZHNO-SAKHALINSK, September 28 (RIA Novosti) – A deputy head of Russia’s environmental watchdog said Thursday that pipeline construction under the massive Sakhalin II oil and gas project in Russia’s Far East must be stopped.

“Further work to build the Sakhalin II pipeline as it has been done to date is inadmissible,” Oleg Mitvol said, adding he did not demand the closure of the project in general.

Russian officials accuse project operator Sakhalin Energy of major environmental breaches, and the Ministry of Natural Resources last Monday annulled the 2003 environmental expert review for the $20 billion project, which is led by Royal Dutch Shell (55%).

Mitvol, deputy head of the Federal Service for the Oversight of Natural Resources, who is currently on the island of Sakhalin leading a probe into the project, said the pipeline has to be rebuilt.

“Environmentalists’ warnings have become reality. Landslides are taking place along the pipeline route, and a seismological danger exists. These have not been taken into account. Given such building practices, accidents will be inevitable when pressure is built up in the pipe,” Mitvol said.

But Mitvol said the consortium running the project, which also includes Japan’s Mitsui (25%) and Mitsubishi (20%), would not be stripped of its operating license.

“The destruction of nature does not unfortunately lead to any license-related risks,” he said, although he promised to punish the operator.

Experts said the width of paths for each oil and gas pipeline, which are 750 kilometers (about 470 miles) long, exceed the norm by 120 meters (about 490 feet). They also said the boring platform has been installed in the feeding ground of the rare gray whale.

Other claims concern alleged ecological violations in the Aniva Bay, at the southern end of Sakhalin.

Massive fish and crab kills have been reported in the area, and inspectors earlier established that a Sakhalin Energy vessel dumped a mixture of methylene dichloride and lubricating oil into the bay.

A spokesman for the ministry said earlier that the project might have caused ecological damage worth $50 billion, but said it will take a long time to make detailed calculations.

But Sakhalin Energy said prior to the revocation that accusations about environmental performance are “deeply misleading” and are “based on a procedural argument relating to the internal workings and mandate of component agencies making up the Ministry of Natural Resources.”

The possible suspension of the project following the revocation of the environmental review means plans to develop a crucial LNG plant will be delayed, which will put in jeopardy contracted deliveries to Japan, South Korea and the United States, due to start in 2008.

Sakhalin Energy said September 20 this will “lead to significant delay of the project, extra costs and irreparable damage to the reputation of this venture and the Russian Federation as a whole.”

Royal Dutch Shell has already suspended work on several stretches covering seven kilometers (four miles) overall of the 800 kilometer (500 miles) line.

Shell announced last year that the estimated cost of the project implemented under a production-sharing agreement has doubled. The cost increase has complicated state-controlled energy giant Gazprom’s bid to swap one of its fields for 25% of Sakhalin II.

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