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RIA Novosti: Sakhalin II pipeline construction resumes – watchdog

10:33 | 01/ 08/ 2007 

YUZHNO-SAKHALINSK (Far East), August 1 (RIA Novosti) – Russia’s industrial safety watchdog, Rostekhnadzor, said Wednesday the construction of a trunk pipeline under the giant Sakhalin II oil and gas project in the country’s Far East has resumed.

Last Thursday, Rostekhnadzor suspended the construction of the pipeline on the stretch running over a tectonic fracture near the village of Yasnoye, citing violations of design-stipulated requirements on the drainage system.

A spokesman for Rostekhnadzor’s Sakhalin branch said the watchdog had reviewed the results of an independent evaluation of the improved technical solutions submitted by the project operator, Sakhalin Energy, and decided to allow the company to continue construction.

Sakhalin Energy, which is controlled by natural gas monopoly Gazprom, said the changes to the original design were necessary to prevent accidents, including mudflows, as the 800-kilometer (500-mile) pipeline was being laid on complex terrain, with seismic fractures, hills and numerous streams.

“While building the pipeline in a seismologically hazardous zone near the village of Yasnoye, some technological schemes were improved,” a company spokesperson said, adding that independent experts highly praised the improvements.

The ambitious project, formerly led by Anglo-Dutch oil giant Shell, experienced months of intense pressure last year from Russian authorities, who accused it of causing serious environmental damage to Sakhalin Island, including deforestation, toxic waste dumping and soil erosion.

The dispute was largely resolved when Russia’s Gazprom [RTS: GAZP], which acquired a controlling stake in the project last December, and the authorities coordinated in April 2006 a plan to fix the damage.

The stakes of the other partners, Royal Dutch Shell, Mitsui and Mitsubishi, halved to 27.5%, 12.5% and 10% respectively, as a result of the deal.

Sakhalin II has estimated reserves of 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas. The project also comprises a liquid natural gas (LNG) plant, with a capacity of 9.6 million metric tons a year, which is due to be launched in 2008, and an LNG export terminal. Most of the LNG from the project will be exported to Japan.

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