The Guardian (UK): Banks warned not to fund Sakhalin-2 project

· RBS and ABN reputations at stake over environment
· Russians ignoring green concerns, say campaigners

Terry Macalister
Monday July 2, 2007

Royal Bank of Scotland, ABN Amro and the government’s export credit agency have been told by green campaigners not to consider funding or underwriting Shell’s Sakhalin-2 gas project in Russia because of continuing danger to the future of western grey whales and wider environmental concerns.

Allegations that development of the $20bn (£10bn) energy scheme is still being undertaken in an irresponsible way undermines Kremlin arguments that past problems should all be laid at the feet of Shell and would end when Russian state-owned Gazprom took a controlling stake in the project, as it did in December.

A group of campaigners, including the WWF, Friends of the Earth and Russia’s Sakhalin Environment Watch have written to the funding groups saying that violations of bank lending policies are continuing and urging them “to protect the integrity [of] your bank’s commitment to social and environmental responsibility by declining financing of Sakhalin-2”.

The note to Patrick Crawford, chief executive of the export guarantee department in Britain, argues that “financing of the enormously risky Sakhalin-2 fundamentally conflicts with the department’s environmental policies and carries significant risks to your reputation”.

They go on to include a recent submission from Sakhalin Environment Watch to the local Russian administration claiming fish stocks have been damaged by the disruption of river flows and there have been no measures put in place to stop soil erosion and oil spills.

Shell, Gazprom and its other Japanese partners, who run the liquefied natural gas project through the Sakhalin Energy Investment Company, are also accused of having a “lacklustre approach to the critically endangered western grey whale” which spawns in the offshore area around the gasfield.

“Be it before, during or after the Gazprom takeover, Sakhalin-2 has never been close to complying with Russian law, international best practice and the policies of public private banks that are considering financing for the project,” said Dmitry Lisitsyn, chairman of the Sakhalin Island-based Sakhalin Environment Watch.

There is particular anger at ABN Amro for backing a scheme that has been shunned by the European Bank for Reconstruction and Development because it was a founder of the Equator Principles which were meant to put strict guidelines on lending to environmentally sensitive projects.

“By financing Sakhalin-2, ABN Amro circumvented the Equator Principles and undercut environmentally responsible banks that have so far refrained from financing the project,” said Paul de Clerck, corporate campaign coordinator at Friends of the Earth International.

The export credit guarantee department said no decision had been taken on underwriting the Russian project. No decision would be taken until an independent report had been completed.

“Before we could agree, the project would have to satisfy us that it complies with the social, environmental and sustainability criteria that we, as part of the UK government, consider acceptable for an infrastructure project,” a spokesman said.

Neither RBS nor ABN were available for comment.

Shell said: “In April 2007 the ministry of natural resources assessed an environmental actions plan as satisfactory and compliant with the requirements of environmental legislation of the Russian Federation. Sakhalin Energy has a strong commitment to high environmental standards and principles.

“Onshore and offshore construction schedules have been shaped by environmental considerations to minimise impact. We realise that a project of this size and magnitude will have some impact but our view is that construction-related impacts are temporary and reversible.”

http://business.guardian.co.uk/story/0,,2116056,00.html

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