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Itar-Tass: Russia Audit Chamber reveals violations in Sakhalin-2 project

ITAR-TASS Sakhalin II

30.10.2006, 16.20
 
MOSCOW, October 30 (Itar-Tass) – Checks of the Sakhalin-2 project carried out by the Russian Audit Chamber have revealed numerous violations, mostly on the part the operator of the project, the Chamber’s auditor Sergei Abramov said.

He said that the “chamber as a top financial control authority also has checked bodies of executive power that must accomplish within their competence the control of the implementation of production sharing agreements”.

He said that apart from numerous irregularities revealed in earlier checks by the Russian Federal Service for Supervision of Natural Resources (Rosprirodnadzor) of the Sakhalin Energy, which is the project’s operator, “we also have stated substantial violations by the operator of environmental legislation”.

Besides, “we consider as invalid the proposals of increasing expenditures in the project more than two times”, Abramov said.

He cited “several substantial violations from the perspective of technology, the development and approval of decisions on the development of oil fields, and violations of property management”.

“We see that the project was signed and is being implemented on not beneficial conditions for Russia. But being a civilised state, we do not have the right to revise this agreement, but can only demand the fulfilment by the operator of Russia’s laws,” Abramov said.

Minister of Natural Resources Yuri Trutnev said in Yuzhno-Sakhalinsk last week that the violations exposed by checks of the project “are liable to effect of five articles of the Criminal Code – beginning from violations of environmental legislation that lead to illegal forest cutting”.

He ordered Rosprirodnadzor to send materials of the checks to the Russian Prosecutor General’s Office.

The Sakhalin-2 project envisages the development of two major hydrocarbon deposits under the production sharing agreement.

Two drilling sea platforms, liquefied natural gas plants, an 800 kilometre-long pipeline and an oil-loading terminal are being constructed under the project.

The British-Dutch company Royal Dutch/Shell has a 55 percent stake in the operator company. Japan’s Mitsui and Mitsubishi companies hold respectively 25 percent and 20 percent of shares.
 

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