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The Guardian: Wildlife group sues government agency over Sakhalin-2

· Campaigners says rare whales are at risk
· Department denies underwriting scheme

Terry Macalister
Thursday August 16 2007

A government agency is to be taken to court by wildlife campaigners who argue that the Export Credit Guarantee Department is undermining Britain’s ethical foreign policy by giving financial support to a Russian gas project that will increase global warming and threatens an endangered species of whale.

WWF, in partnership with the environmental and social justice organisation, the Corner House, has filed the case against the department arguing that it committed itself to underwriting $1bn worth of contracts for Shell’s Sakhalin-2 scheme three years ago despite ministers insisting no decision had yet been taken.

James Leaton, WWF-UK’s oil and gas policy adviser, said: “ECGD’s support for the Sakhalin-2 project effectively gave the backing of the UK government to an environmental catastrophe. ECGD has paid lip-service to the environment, but shows no intention of taking concrete action to prevent damage caused by the projects it backs. Supporting this project shows no coherence across the UK government on protecting biodiversity or tackling climate change.”

The wildlife group yesterday issued a letter dated March 4 2004 from the ECGD to the Shell consortium, Sakhalin Energy Investment Company, obtained under the Freedom of Information Act which says: “We are pleased to confirm … that ECGD is able to support the contracts detailed in the schedules of this letter.”

But the note from the government department also points out that the support is conditional on the agency being reassured on various potential “environmental and social impacts arising from the project”. Days later in the House of Commons, the then trade minister, Mike O’Brien, insisted that “in October 2002 we received an application for cover for the Sakhalin-2 project. No decision on ECGD cover has yet been taken.”

Despite the WWF legal action claiming the contrary, the ECGD stuck to its guns last night with a spokesman insisting the position remained as it ever was with no effective insurance given to help Shell. “We think the WWF case is pretty flimsy and have endlessly told them that no decision has yet been made. It does not seem to be getting through but there is no cover in place, no premium has been received and no British taxpayer’s money at risk.”

But Nick Hildyard, a co-director of the Corner House, said: “ECGD has broken its own policies. It says that it only gives a commitment to support after it has assessed the environmental impacts of a project. But, in this case, it gave a legally binding promise before getting assurances on the environment. It is impossible now to address many of those impacts, since the work has already been done. ECGD must not be allowed to offer UK government money willy-nilly to environmentally damaging business ventures benefiting foreign countries.”

The European Bank for Reconstruction and Development said this month that it had pulled out of funding the $20bn Sakhalin-2 scheme off Russia’s Pacific coast. The EBRD had reportedly been considering a loan of $300m.

The EBRD has a rigorous system for vetting loans that takes into consideration any environmental issues. At the far eastern island of Sakhalin where the project is based, environmentalists have raised concerns about its impact on salmon-spawning rivers and the summer feeding grounds of rare gray whales. In June 2005 the EBRD delayed its approval over possible problems with the project’s pipeline. Shell has recently been forced to hand over a controlling stake in the world’s largest liquefied gas project to Russian state-owned Gazprom. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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