Environmental obligations 'violated' at Sakhalin

26-09-2006

A number of environmental obligations were violated in the oil and natural gas development project off Sakhalin island, according to the Russian foreign minister.

Sergei Lavrov said British-Dutch Shell and Japanese firms Mitsui and Mitsubishi caused erosion and problems in wastewater treatment at the Sakhalin-2 project.

The Russian natural resources ministry last week revoked permits for the $20 billion (£10.5 billion) project off the Pacific Ocean island of Sakhalin.

Speaking to journalists in New York, Mr Lavrov urged the Sakhalin-2 operator, Sakhalin Energy, led by Shell, to fulfil its obligations.

Looking to reassure investors, Mr Lavrov said in a statement that his country was a "long way from backing out of agreements we have reached, no matter how difficult the conditions were when they were agreed to."

Sakhalin Energy said it was taking measures to tackle the problems, but it argued the apparent violations should not lead to the revocation of the license.

The European Commission, Japan and the US have criticised the Kremlin over the apparent political overtones enveloping the decision.

Russia's environmental agency has ordered a full probe into the Sakhalin-2 oil and gas project.

Later this week, Oleg Mitvol, deputy head of the environmental watchdog, will visit Sakahlin-2 and hold talks with project managers, with British, German, Japanese, US, Dutch and South Korean diplomats have also been invited.

Meanwhile, the Wall Street Journal said managers at Royal Dutch Shell were chewing over legal options if the firm is unable to resolve the issue with Russian authorities.

Shell owns a 55 per cent stake in the project; Mitsui and Mitsubishi hold 25 per cent and 20 per cent stakes respectively.


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