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Financial Times: Sakhalin II project problems may be temporary but they are still inexcusable

By Doug Norlen: Published: November 29 2006 02:00 | Last updated: November 29 2006 02:00

From Mr Doug Norlen.

Sir, Arkady Ostrovsky’s article “Out on a limb” (November 23), on the controversy-plagued Sakhalin II oil and gas project in Russia, quotes Ian Craig, chief executive of Sakhalin Energy, as claiming that environmental problems are temporary. One could say the same about a mugging in the park, but that does not make it excusable. Mr Craig also claims that many project violations are fixable, without explaining why so many have not been fixed.

Perhaps one reason is that, if allowed to proceed, many of the injuries the project inflicts will be neither temporary nor fixable. Instead, the project’s fundamental design flaws pose permanent chronic risks to the environment and local economy, and to all companies and financiers involved. This includes building an offshore oil platform adjacent to the only feeding habitat of the critically endangered western gray whale, onshore pipeline designs that fail to account for natural conditions and geohazards, ongoing pollution discharge into the fisheries-rich Aniva Bay, the lack of an approved comprehensive oil spill prevention and response plan, and more.

As Mr Ostrovsky rightly indicates, even the European Bank for Reconstruction and Development branded the project “unfit for purpose” based on fundamental derogations of its environmental policy.

Sakhalin II’s permanent design flaws result from Shell’s failed management system, irrespective of the current financial debate between the oil giant and Russia. Perhaps this is the same failed management referred to by Jeroen van der Veer, chief executive of Royal Dutch/Shell, when he told the Financial Times last year: “We do some projects very well, and this large Sakhalin project and some others we don’t do very well.”

Doug Norlen,
Policy Director,
Pacific Environment,
San Francisco, CA 94104, US

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