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UpstreamOnline: Sakhalin 2 cleans up its act

By Upstream staff

Environmental concerns dogging the Sakhalin 2 development, in Russia’s far east, will be resolved next year, Sakhalin Energy management told Russian resources officials today.

The two sides met after the Gazprom-led project came under fire from the Russian government for what it claimed were continued environmental violations.

“I am pleased with your timetable to clear the problems next year and I think it’s positive Gazprom plays such a central role in your management,” Resources Minister Yuri Trutnev told Sakhalin Energy’s chief executive Ian Craig at a meeting in Moscow, Reuters reported.

Shell and its Japanese partners ceded control of 50% plus one share in the $22 billion project last year to Russian gas export monopoly Gazprom after breaching a significant number of environmental regulations.

While Craig admitted such violations were continuing, such as dumping soil in rivers and illegally clearing forests, he said a clean green record would be achieved next year, and not in 2010, as the Resources Ministry and Russia’s environmental agency Rosprirodnadzor officials, also present at the meeting, predicted.

Analysts have previously said the Sakhalin 2 project – which is meant to launch a liquefied natural gas plant in the third quarter of next year – could be delayed.

Last month the group said it would delay year-round exports of crude to next year from the end of this year, but insisted LNG deliveries would launch on time.

“We are on track for the project to go on stream next year,” Craig told Reuters, but declined to give a date.

Sakhalin 2 has estimated reserves of around 1 billion barrels of oil and 500 billion cubic metres of gas.

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26 October 2007 12:02 GMT  | last updated: 26 October 2007 12:04 GMT

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