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RIA Novosti: Russia environment watchdog to submit Sakhalin II report in Dec.

16:33 | 29/ 11/ 2006 

MOSCOW, November 29 (RIA Novosti) – Russia’s environmental watchdog will present a final report on the Sakhalin II oil and gas project in the country’s Far East by mid-December, a senior service official said Wednesday.

The service said earlier this month that project operator Sakhalin Energy, controlled by Royal Dutch Shell, is in breach of Russia’s environmental regulations, and asked the agency overseeing the use of water resources to consider stripping it of 19 licenses.

“A probe into Sakhalin II was completed Monday, and we will draw up a final report by the middle of December,” said Oleg Mitvol, deputy head of the Federal Service for the Oversight of Natural Resources.

The official said his expert group has identified a number of serious violations, some of which fall under the provisions of Russia’s Criminal Code.

The Natural Resources Ministry said earlier it is dissatisfied with the environmental measures taken so far by the Sakhalin Energy.

The multibillion-dollar project has been accused of inflicting large-scale ecological damage on Sakhalin Island, including illegal deforestation, the dumping of toxic waste, and soil erosion.

A probe launched into the project operator’s activities uncovered numerous violations of conditions set out in the feasibility study for Sakhalin II, including the illegal routing of an oil pipeline through the territory of a national conservation area and environmental damage on the island’s Aniva Bay.

The ministry said the operator acknowledged that the island’s 529 rivers needed to recover following work by contractors.

It also quoted media reports that the company “concealed information on serious threats to the island’s ecology during the project’s development.”

Oil major Shell holds a controlling 55% stake in the Sakhalin II deposits. Japan’s Mitsui and Mitsubishi own 25% and 20%, respectively.

On September 18, the Natural Resources Ministry annulled its own 2003 Sakhalin Environmental Expert Review (SEER), which gave the project a positive evaluation, following action by prosecutors.

As well as the environmental issue, the production-sharing agreement behind Sakhalin II, which allows Shell to comfortably recoup all its expenses before sharing any of its profits with the state, is hugely unpopular with the Russian government.

The Sakhalin II project comprises an oil field with associated gas, a natural gas field with associated condensate production, a pipeline, a liquefied natural gas plant and an LNG export terminal. The two fields hold reserves totaling 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas.

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