Russian regulator uncovers new violations in Sakhalin II project


Russia’s environmental regulator said Friday it had found new legal violations committed by Gazprom-controlled Sakhalin Energy, which operates the Sakhalin II oil and gas project off the country’s Pacific Coast.

Rosprirodnadzor’s branch in Sakhalin said its experts had found that a subsidiary of Sakhalin Energy, building a stretch of a pipeline crossing several rivers, had failed to carry out riverbank reinforcement and landslide containment work. Regulators sent a report setting out their findings to local and regional environmental prosecutors, and ordered the company to rectify the uncovered violations, the statement said.

The ambitious Sakhalin II project, formerly led by Anglo-Dutch oil major Shell, was subjected to months of intense pressure last year from Russian authorities, who accused it of inflicting major environmental damage on Sakhalin Island, including deforestation, toxic waste dumping and soil erosion. The dispute was largely resolved after Russian natural gas monopoly Gazprom acquired a controlling stake in the project last December, and authorities coordinated in March 2007 a plan to fix the damage. However, the environmental regulator office continues to closely monitor the implementation of the project, and several new allegations have arisen this year.

Minority partners in the project, Royal Dutch Shell, Mitsui and Mitsubishi, currently control 27.5%, 12.5% and 10% of Sakhalin Energy respectively, in line with the 2006 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 an 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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