Shell's Sakhalin II environmental oil permit cancelled



Posted on 19 September 2006  | 
The Russian government has cancelled an environmental permit for Shell's $20 billion oil and gas project in the far east of Russia. This has the potential to suspend the construction of the project until the permit is satisfied.
This officially confirms the problems the project has had regarding pipeline construction and erosion control, which have been raised by WWF over the last two years. The pipelines run 800 kilometres, the length of Sakhalin Island, crossing 1,000 watercourses.

The project has breached local and international construction standards over the last few years despite calls for standards to improve. The decision to cancel the permit comes at a crucial time as the European Bank for Reconstruction and Development (EBRD) are considering whether to approve a loan to the project, which would give it environmental and social credibility.

The UK's Export Credit Guarantee Department (ECGD) is also considering whether to loan the project money.

James Leaton, WWF oil expert, said: "In light of this intervention by the Russian government the EBRD should review its continued interest in the Sakhalin-2 project. The Bank's policies clearly state projects must comply with local regulations."

"There are ongoing environmental problems that Shell has failed to address. Poor construction not only results in environmental degradation but also in increased financial risks to the project from disruptions due to landslides and oil spills."

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