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The Moscow Times: Police Seize Sakhalin-2 Probe Papers

Russian Police

(A police car on Wedesday passing the offices of the Federal Service for the Inspection of Natural Resources Use, where officers carried out a search.)

Thursday, October 19, 2006. Page 1.
By Miriam Elder
Staff Writer  
Denis Sinyakov / Reuters
The campaign against Sakhalin-2 appeared to hit a stumbling block Wednesday, with organized crime police seizing documents related to the investigation from the Natural Resources Ministry’s environmental agency.

Police officers spent three hours examining documents relating to the issue of a license for the Yuzhno-Tambeyskoye field in July, a spokesman for the Interior Ministry’s organized crime unit said.

Police also seized documents relating to recent trips by environmental agency officials to the Shell-run Sakhalin-2 project and fields run by LUKoil in the Komi republic, said Yevgeny Snegiryov, spokesman for the environmental agency, the Federal Service for the Inspection of Natural Resources Use.

“It seems strange to us that police took documents not only relating to [Yuzhno-Tambeyskoye] but also to business trips to Sakhalin and Komi,” Snegiryov said.

“It’s difficult for us to say exactly what the police have against the Federal Service for the Inspection of Natural Resources Use in this case,” he said.

Oleg Mitvol, deputy head of the agency, has been leading the charge against Sakhalin-2, accusing project operator Sakhalin Energy of committing gross ecological violations during the construction of an 800-kilometer pipeline that runs the length of Sakhalin Island to a large oil and gas plant in the south.

“The police took two sets of airplane tickets, two hotel bills and two general business trip audits,” Mitvol said.

He confirmed that the documents related to a recent trip to investigate LUKoil at Komi, but skirted the question when asked if they also involved Sakhalin-2.

Mitvol said the officers’ unannounced visit was “not normal” and acknowledged he was worried that his campaign might be under threat.

“I am scared,” he said.

The searches cast further confusion over the state’s campaign against Shell. Senior government officials have been sending mixed messages over the sanctity of Shell’s production sharing agreement, or PSA, in Sakhalin-2, with Mitvol taking a tough position. Industry and Energy Minister Viktor Khristenko said Tuesday that the PSA could only be revoked or changed if both sides agreed.

A decision on the project, and whether to revoke its environmental license, could be made by the end of the month, after Natural Resources Minister Yury Trutnev returns from a trip to Sakhalin on Oct. 26.

Mitvol has taken up the mantle as the country’s top environmental crusader, leading a very public campaign against Sakhalin-2 and issuing repeated threats to bring criminal charges against the project if it failed to improve its environmental record. His crusading has at times appeared to verge on being a one-man show. It is not clear how much support he has from Trutnev, his boss.

His campaign suffered a setback this week, when a Moscow court refused to hear a lawsuit filed by his agency against the Natural Resources Ministry to obtain the right to revoke Sakhalin Energy’s environmental license. Mitvol’s threats to shut down the project, Russia’s largest foreign investment, were coupled with government threats to review similar projects by ExxonMobil and Total, prompting fears of a wider crackdown on ventures with foreign involvement.

The environmental agency recently said it would also look into purported violations by LUKoil and Rosneft, adding Russian companies to the list of those due to be investigated.

On Wednesday, it said it would also open an investigation into ecological and technical failures at Gazprom’s oil unit, GazpromNeft, on Nov. 21.

Police spokesman Yevegny Artyonov said Mitvol was not the target of Wednesday’s search. “There are no complaints against Mitvol himself,” Artyonov said. “The people who committed the offense will be examined and brought before the courts.”

He maintained the documents seized were related to the license for Yuzhno-Tambeyskoye, but when pressed acknowledged that the issuing of the license was “not really” in question. He failed to provide further details.

Mitvol led a team of environmentalists and journalists to Sakhalin in late September and carried out a similar trip to Komi last week.

Government pressure on Sakhalin-2 has been seen as a means of ensuring that negotiations on Gazprom’s entry into the project work out in favor of the state-run gas giant.

Gazprom has been seeking a 25 percent stake in the project, but negotiations hit a snag when Shell announced last year that the project would cost $20 billion — double the initial estimate.

Gazprom has also faced difficulty at Yuzhno-Tambeyskoye, going to the courts to ensure the size of its stake in that major gas field, which has estimated reserves of 1.2 trillion cubic meters.

A Moscow court in August ruled that the license to develop the field in the Yamal Peninsula must be returned to Tambeyneftegaz, in which Gazprom holds a 25.1 percent blocking stake. The license had been transferred to Yamal LNG, a body set up by Tambeyneftegaz majority shareholder Nikolai Bogachev, and Tambeyneftegaz’s interest in the new group was subsequently reduced to 51 percent, which in turn would have diluted Gazprom’s stake in Yamal to 12 percent.

Gazprom is the world’s largest gas company and is positioning itself to become an even larger player in the country’s enormous hydrocarbon sector.

The police move against the environmental agency came amid other signs that the state was seeking to change its approach to Sakhalin Energy.

Also Wednesday, Sakhalin’s environmental prosecutor questioned Dmitry Belanovich, the official appointed by Mitvol to lead the environmental audit of Sakhalin-2. Belanovich was asked to provide details on the investigation, including proof of compliance with the law, following a complaint by Sakhalin Energy.

The natural resources minister appears to be taking control of the investigation, and he plans to meet Sakhalin Energy officials during his visit to the island next week. “We received an official invitation to take part in a meeting with Minister Trutnev while he is in Sakhalin,” Sakhalin Energy spokesman Ivan Chernyakhovsky said.

“We expect to get at least preliminary results of the [environmental agency’s] audit that is going on currently, to be able to develop a set of comprehensive measures and actions” to address the recommendations, he said.

The Federation Council is to examine the case against Sakhalin-2 on Friday. Trutnev, Khristenko and environmental agency chief Sergei Sai will “inform the senators of all aspects relating to this project,” Deputy Speaker Alexander Torshin said, Interfax reported.

The shift in strategy could signal an end to, or at least a dampening of, Mitvol’s crusade.

The police investigation “does indicate there are forces within the government who do not favor the current approach to Shell at Sakhalin-2,” said Alex Brooks, a natural resources analyst at UBS. “But there is no telling if those forces will win out.”

Environmentalists said they were confident that the campaign against Sakhalin Energy — which they accuse of causing widespread damage to the wildlife and landscape of Sakhalin Island — would continue. “We are satisfied that environmental issues are back on the agenda and it’s not just politics,” said Masha Vorontsova, the head of International Fund for Animal Welfare, Russia.

“Of course it’s mostly [Mitvol], but it seems that Minister Trutnev fully supports this,” she added.

Ivan Blokov, campaign director for Greenpeace Russia, accused government officials of attempting to block the investigation of Sakhalin-2. “I find it surprising that the environmental prosecutor was not checking Sakhalin Energy — not fixing their violations — but immediately started working against” the Federal Service for the Inspection of Natural Resources Use, he said.

“I can only suggest it may be linked to Sakhalin Energy,” he said.

Sakhalin Energy’s Chernyakhovsky declined to comment on Wednesday’s search or the prosecutor’s questioning of the investigation team leader.

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