Globe & Mail: Halt urged for Shell project in Russia

Minister denies environmental complaints are a ruse to obtain a stake in Sakhalin
ALEX NICHOLSON

Associated Press

MOSCOW — Russia’s environmental watchdog has called for pipe-laying work to be halted at a Royal Dutch Shell PLC-led liquefied natural gas project on Russia’s far eastern Sakhalin Island, even as the country’s Foreign Minister says problems could be resolved through dialogue.

“We want criminal cases for every destroyed tree or damaged river,” Oleg Mitvol, deputy head of Russia’s state environmental agency Rosprirodnadzor, said, according to 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 (U.S.) Sakhalin-2 project could be resolved.

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

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

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

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

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

On Wednesday Mr. Lavrov called such allegations “groundless,” while Sakhalin Energy’s chief executive officer Ian Craig said it is “highly unlikely” that work will be interrupted.

Anglo-Dutch Royal Dutch controls 55 per cent of Sakhalin Energy, while Mitsui & Co. Ltd., and Mitsubishi Corp., both of Japan, have 25 and 20 per cent, respectively.

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