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AFX News Limited: Shell-led group pledges to urgently address remaining Sakhalin-2 issues

10.20.2006

LONDON (AFX) – Royal Dutch Shell PLC-led Sakhalin Energy has assured the Russian government it will urgently address the remaining environmental issues that were raised about the 20 bln usd Sakhalin-2 gas project.

Ian Craig, chief executive of Sakhalin Energy, said in a letter to Russian Minister for Natural Resources Yuri Trutnev that it will ‘respond quickly and adequately to correct any more non-conformances’ identified during the project inspection this month.

He assured Trutnev the group will engage in a ‘constructive dialogue’ with the authorities and treat any findings of the inspection ‘with the highest priority’.

Sakahlin Energy ‘looks forward to the opportunity to present a comprehensive action plan to remediate all identified non-compliances to Minister Trutnev next week,’ he said.

Shell owns a 55 pct stake in project, whose permit the ministry canceled last month due to allegations of serious environmental violations.

Japanese partners Mitsui & Co and Mitsubishi Corp hold the remaining 45 pct in Sakhalin-2, the world’s largest privately-funded project.

Trutnev earlier issued a stern warning that Sakhalin-2 must obey Russian environmental laws or face being shut down.

‘If the Russian Federation’s laws are going to be violated, if damage is done to the environment, we will take measures to stop the project,’ Trutnev told reporters in Moscow.

Sakhalin-2 includes the construction of an 800-kilometer gas pipeline that runs the length of the Sakhalin island, a liquefied natural gas (LNG) plant, two oil platforms and an oil terminal.

It is targeting to deliver its first LNG shipment to Japan in 2008.

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