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argus-eyes.com: Mitvol turns up the heat: I received these letters from John Donovan, owner of the anti-Shell website www.royaldutchshellplc.com.

EXTRACT: What documents are these? Where are they from? I have email correspondence between executives in Sakhalin Energy management from 2002. I received these letters from John Donovan, owner of the anti-Shell website www.royaldutchshellplc.com. I received them on 19 October and forwarded them to Sakhalin Energy with a request for an official reply. But I have not received any reply so far. I presume that they are in shock.

How could you prove that these documents are genuine? They appear genuine and we have special services working to prove this. Once they have been verified, we will have enough evidence to take Sakhalin Energy to court. If we win, the Sakhalin 2 consortium should pay compensation for all the environmental damages – which will come to over $10bn – as well as compensation to the state for loss of revenues caused by the additional delays.

THE ARTICLE

Oleg Mitvol, the outspoken deputy head of Russia’s environmental watchdog, Rosprirodnadzor, tells Argus he has proof that Shell management covered up environmental damage at Sakhalin 2 – and plans to prosecute.

Sakhalin Energy, operator of the Shell-led Sakhalin 2 project, says it has sorted out all the environmental criticisms raised by Rosprirodnadzor and that there are no grounds to revoke its permits. Do you agree? Sakhalin Energy has agreed that all our complaints are legitimate but they have only addressed the problems in the Makarovsk region, where construction of the pipeline has been suspended. To address all of our criticisms they will need to clean the Aniva bay on the south end of the island – which has been destroyed by Sakhalin Energy – introduce fish there and plant new trees.

Do you think that this will be possible for them? No, I do not believe that it is possible.

Is it possible to find a compromise? According to the Sakhalin 2 production-sharing agreement [PSA], all disagreements between the investor and the state should be settled in Stockholm. The only way to find any sort of compromise will be through international arbitration in Stockholm.

Who will take Sakhalin Energy to court? I will take them. I have documents proving that the Sakhalin Energy management was aware that the company violated technical standards, but carried on trying to meet project deadlines and refused to stop work. I am confident of winning my case in Stockholm.

What documents are these? Where are they from? I have email correspondence between executives in Sakhalin Energy management from 2002. I received these letters from John Donovan, owner of the anti-Shell website www.royaldutchshellplc.com. I received them on 19 October and forwarded them to Sakhalin Energy with a request for an official reply. But I have not received any reply so far. I presume that they are in shock.

How could you prove that these documents are genuine? They appear genuine and we have special services working to prove this. Once they have been verified, we will have enough evidence to take Sakhalin Energy to court. If we win, the Sakhalin 2 consortium should pay compensation for all the environmental damages – which will come to over $10bn – as well as compensation to the state for loss of revenues caused by the additional delays.

Where did you get the figure of $10bn from? This figure was calculated by a group of experts, including Rosprirodnadzor. It is a rough figure. In November, we will set up a special commission comprising Russian and international experts to assess the cost of damages.

Do you think that environmental approval for Sakhalin 2 will be revoked? I do not know. Sakhalin Energy has a strong lobby in the government. The fact that Rostekhnadzor [Russia’s technical watchdog] is reluctant to sign the document to revoke the environmental approval supports this view.

Rosprirodnadzor has stepped up its investigations into oil companies in Russia. Why is this happening? In late September, natural resources minister Yuri Trutnev met President Vladimir Putin. They concluded that many oil companies have not developed all of the fields for which they have licences, and this means that the state receives less tax revenue. Many companies are doing all they can to win as many new licences as possible to increase their capitalisation without any thought of developing them. Companies find it very easy to persuade officials to renew these licences. We think that this should be stopped.

Why have you started with Lukoil? Was the audit timed to coincide with the company’s annual presentation in New York on 18 October? Ivan Blokov from Greenpeace told us that Lukoil and TNK-BP had committed the most serious environmental violations in Russia – the former at its fields in the Komi autonomous republic and the latter at Samotlor in west Siberia. There was no connection between the timing of our audit and Lukoil’s presentation in New York.

Blokov says TNK-BP has invested a lot of money to sort out the problems in Samotlor. I hope that this is true. We want to encourage oil companies to care about nature.

How can Rosprirodnadzor do that? We have to make sure that companies develop their projects in accordance with their licence agreements and do not damage the environment. If we do find violations, we recommend that the licensing commission, led by Rosnedra [Russia’s agency for subsoil use], revoke that firm’s licence.

Could you give examples of when licences were revoked? Last year, around 80 licences were revoked.

And that followed complaints from Rosprirodnadzor? Yes.

Rosprirodnadzor has asked Rosnedra to revoke Rosneft’s licences in Sakhalin. Are you going to audit more of Rosneft’s fields? Yes. I do not want to name the fields now. But I am confident that all oil companies will be audited in the next two years.

http://www.argus-eyes.com/marketing/resources/update.htm#c

Argus Media is a leading provider of price assessments, business intelligence and market data on the global oil, gas, electricity, coal, emissions and transportation industries. Decision-makers around the world rely on the independent market coverage and analysis provided by Argus’ 150 employees. Specialising in discovering prices for the opaque over-the-counter energy markets requires Argus to have a consistent reporting methodology. Argus employees observe a strict ethics policy. Argus was founded in 1970 as Europ-Oil Prices and is owned by the family of its founder and by its employees.

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ACTUAL ARTICLES

Argus FSU Energy: Mitvol Turns up the heat: 19 November 2006

Johnson’s Russia List (sourced from Russian news agency, Interfax: Nov 2006

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