Risky Business - the new Shell

Posted on 25 November 2005

Shell’s failure to apply its Environmental Impact Assessment Guidelines to Sakhalin II...
The importance of Environmental Impact Assessment (EIA) is recognised by communities, companies, banks and governments. An effective process can deliver environmental, social and financial benefits.

This report has compared the EIA process undertaken by Shell on the Sakhalin II project with Shell’s own group manual on EIA. The application of Shell’s own EIA procedures has been found to be seriously lacking, with examples and evidence provided from a range of sources. This issue of sequencing is key if maximum environmental protection is to result, otherwise opportunities to change designs are lost. In this case, Shell has made decisions first, and then sought to justify them through the EIA process.

Despite an indication that a Strategic Environmental Assessment was required, the lack of strategic planning on Sakhalin is resulting in damaging infrastructure development. Shell did not take into account social and environmental interactions, which is impacting on fisheries, the heart of Sakhalin’s economy. Damage has already emerged, with much smaller catches in Aniva Bay in 2005.

Shell has been in denial of the breadth and depth of scope of EIA required for Sakhalin II, despite stakeholder input. The baseline data underpinning the Sakhalin EIA is not fit for purpose. This is evident in terms of poor data on trans-boundary species, obvious limitations in understanding of the Western Gray Whale, and the failure to recognise indigenous communities. Shell has failed to incorporate environmental information into decision-making and conduct a valid, early assessment of alternative project designs. In particular it is clear that environmental aspects were not considered in choosing the platform location, and no alternative options have been offered.

Shell has had ample chances to alter the project, but has chosen its construction timetable over environmental protection. Shell has handled consultation so badly to date, it has already seriously damaged relations and trust with key stakeholders. This has manifested in concerned groups taking out adverts in international newspapers to convey their dissatisfaction at Shell’s actions. Shell’s continuing attempts to supplement the EIA constitute a paper compliance exercise which cannot involve meaningful consultation. There is so little left to consult on at this stage, any process claiming to be consulting on the whole project would be considered flawed.

Shell is ignoring the fact that many of its impacts should be classified as of major significance. Even where the EIA indicates issues, Shell has only sought to reduce the emphasis placed on them, rather than address the problem. Worst case scenarios have not been considered in the analysis, skewing the picture to the positive. It appears Shell considers that significant impacts on a critical habitat of an endangered species are acceptable, ignoring the views of a panel of world experts and other stakeholders. Investigation of the implications of this flawed EIA shows that it is already contributing to negative impacts on the environment and local people. This has already resulted in Gray Whales being exposed to unnecessary risks and unknown impacts, whilst salmon spawning areas have already been destroyed.

Shell has not used rigorous quantitative assessments and modelling to predict the expected impacts and the effectiveness of its proposed mitigation measures. This is evident in terms of the noise the whales were exposed to during construction in Summer 2005. Shell exceeded the levels required by the eminent, independent panel of experts, on a repeated basis.

The company’s recognised biodiversity implementation gap is at its widest in Sakhalin, with no indication key issues were included in the early decision-making processes. Shell is putting its own credibility and reputation at risk, as will any institution associated with the project. Shell is heading for having the extinction of a species of whale on its record. Shell has not taken a sufficiently precautionary approach to guarantee it will not impact upon endangered species. International cetacean experts have stated clearly that more could have been done to reduce risks to the whales. Shell’s actions are contradictory to local regulations and International biodiversity commitments.

Shell is not giving sufficient significance to the importance of the biodiversity in Sakhalin, with the focus on process rather than conservation outcomes. The overreliance on mitigation rather than prevention has caused Shell to come unstuck. Shell has not incorporated impact criteria into operational procedures to prevent significant impacts occurring. This is an example of the gap between clear statements of expected impact, and Shell delivering appropriate mitigation measures. In some cases the mitigation is ineffective (e.g. observers who cannot operate in the conditions present), in others it is not implemented (e.g., contractors failing to apply erosion control measures), whilst in a few it is non-existent (e.g. no recognised technique to clean up oil spills in ice).

In terms of specific issues, Shell refused to wait for the best scientific advice before installing the platform base. Also, Shell has not acknowledged the importance of many of the salmon streams for spawning, and as a result cannot develop appropriate crossing techniques and mitigation measures. Shell has been exposed as having an over-reliance on contractors, which has manifested itself in unacceptable practices on Sakhalin river crossings. Shell did not reduce the risk of collisions with its mitigation attempts during its construction this summer.

Shell’s denial is already resulting in irreversible impacts on the biodiversity and natural resources of Sakhalin Island. This is having a negative effect on the standards practised in Russia, given that local companies are applying better standards on projects elsewhere in Russia.

It also does not bode well for Shell aspirations in other similar locations in the Arctic. Shell has shown interest in the Barents, Berings and Beaufort Sea, all WWF priority Ecoregions. The same issues of whales, ice, fisheries and local communities will face Shell in these locations, but on this evidence they are not equipped to deal with it.

Shell has set its own standards on EIA, which are aligned with World Bank requirements. It is clear the company has not applied this process satisfactorily, to meet any international standard. If financial institutions claiming to have meaningful standards get involved in the project at this late stage it will make a mockery of their standards too.

The European Bank for Reconstruction and Development has a responsibility to tell Shell the Sakhalin II project does not meet its policies; this is the only way Shell will get the message it has to change.

Front cover of the report
Risky Business Report - front cover

Related links