Topic: Sakhalin II dispute
Mass fish and crab kills have been reported in the area, and inspectors earlier established that a vessel dumped a mixture of methylene dichloride and lubricating oil into the bay. Russian officials accuse project operator Sakhalin Energy of major environmental violations, and the Ministry of Natural Resources last Monday annulled the 2003 environmental expert review for the $20 billion project, which is led by Royal Dutch Shell (55%).
"Projects on such a scale have not yet been implemented in Russia, which is why I base my estimates on the experience of clean-up efforts in the Persian Gulf," said Oleg Mitvol, deputy head of the Federal Service for the Oversight of Natural Resources.
Mitvol criticized Sakhalin Energy for resorting to political blackmail instead of attempting to correct its mistakes. "What happened was quite a surprise for Sakhalin Energy," he said. "And I have heard of nothing being done except resorting to political pressure from the company's friends inside the country, and no engineering solutions have been found."
Mitvol, who is leading a probe into the project, said in September that a stretch of pipeline has been illegally routed through the territory of a national preserve, in violation of conditions set out in its feasibility study.
A spokesman for the Russian Natural Resources Ministry said earlier that the project might have caused ecological damage worth $50 billion, but said it will take a long time to make detailed calculations.
But Sakhalin Energy said prior to the revocation of the study that accusations about environmental performance were "deeply misleading," and were "based on a procedural argument relating to the internal workings and mandate of component agencies making up the Ministry of Natural Resources."
The possible suspension of the project following the revocation of the environmental review means plans to develop a crucial LNG plant will be delayed, which will put in jeopardy contracted deliveries to Japan, South Korea and the United States, due to start in 2008.
Sakhalin Energy said September 20 this will "lead to a significant delay of the project, extra costs and irreparable damage to the reputation of this venture and the Russian Federation as a whole."
Royal Dutch Shell has already suspended work on several stretches, covering seven kilometers (four miles) overall of the 800 kilometer (500 miles) line.
Shell announced last year that the estimated cost of the project implemented under a production-sharing agreement has doubled. The cost increase has complicated state-controlled energy giant Gazprom's bid to swap a share in one of its fields for 25% of Sakhalin II.
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