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RIA Novosti: Sakhalin Energy violated pipeline route plan – ecology watchdog

11:36 | 29/ 09/ 2006 

YUZHNO-SAKHALINSK, September 29 (RIA Novosti) – A stretch of a pipeline in the Sakhalin II energy project has been illegally laid through the territory of a national preserve, Russia’s environmental watchdog said Friday.

Oleg Mitvol, the deputy head of the Federal Service for the Oversight of Natural Resources, who is currently leading a probe into the project on the island of Sakhalin, said part of the Sakhalin II pipeline near the village of Sovetskoye passed through the Zubrovy nature preserve in violation with the original route plan.

“This is a criminal violation,” the official said. “We will study the situation and pass all the materials to prosecutors.”

Mitvol also said ecology experts would start aerial photography of the current Sakhalin II pipeline on Monday to compare the results with the original scheme and determine where the pipeline deviates from the planned route.

Russian officials accuse project operator Sakhalin Energy of failing to fulfill environmental recommendations, 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%).

“Further work to build the Sakhalin II pipeline as it has been done to date is unacceptable,” Mitvol said Thursday, although he stressed that the consortium running the project, which also includes Japan’s Mitsui (25%) and Mitsubishi (20%), would not be stripped of its operating license.

A spokesman for the Russian Natural Resources 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 of the study that accusations about environmental performance were “deeply misleading” and were “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 would “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 had doubled. The cost increase has complicated state-controlled energy giant Gazprom’s bid to swap one a share in one its fields for 25% of Sakhalin II.

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