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Sakhalin II oil and gas project Russian Federation
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By: BankTrack
Created before Nov 2016
Last update: 2015-11-01 14:53:10

Contact:

Doug Norlen, Pacific Environment, United States


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Sector Oil and Gas Extraction
Location
This project has been identified as an Equator Project

About Sakhalin II oil and gas project

The Sakhalin II project in the Russian Far East is said by project sponsors to be the largest integrated oil and gas project in the world.  The project  involves three offshore oil and gas platforms and subsea pipelines to shore. The oil and gas is then transported via 800 km of onshore pipelines to one of the world’s largest natural gas liquefaction and export terminal and oil export facilities at Prigorodnoye, in the south of Sakhalin.  Oil and liquid natural gas is then exported via tankers.

Latest developments

WWF Campaign Against Sakhalin

2012-02-01 00:00:00

Latest update

2008-07-18 00:00:00

What must happen

The project should not receive funding from any bank claiming to apply the Equator Principles or equivalent standards. Any such endorsement would send a signal that lower standards are acceptable for the sector and for other operators on Sakhalin Island and elsewhere.

Impacts

Environmental and climate impacts

Sakhalin Energy Investment Company (SEIC) has installed two of its new oil and gas platforms adjacent to the only known feeding ground of the approximately 130 critically endangered Western Gray Whales. After initially planning to build a subsea oil pipeline directly through the whale’s feeding area, SEIC re-directed the offshore pipeline just adjacent to the feeding area, continuing to threaten the population with its far-reaching impact. Noise, collisions, and sediment disturbance put the whales at risk during construction. The whales will face an ongoing risk of an oil spill in this harsh environment. The sea around the platform is covered by ice for 6 months of the year, seriously limiting the ability of SEIC to respond to an oil spill. Despite unreasonably optimistic promises by SEIC, there is no proven effective way to respond to oil spills in ice conditions.

Shell has not followed the precautionary approach, refusing to deviate from its construction schedule to wait for the completion of scientific analysis and it refuses to follow much of the advice from a panel of whale experts hosted by the International Union for the Conservation of Nature. As a result, the decision of whether the oil platforms should be constructed at all in the area of the critically endangered Western Gray Whale became moot issues for the panel. The whale scientists also made recommendations on noise limits, which SEIC has violated on several occasions.

SEIC built over 1000 pipeline river crossings, which has led to damage to salmon spawning rivers. SEIC has failed to construct 800 kilometers of parallel on-shore oil and gas pipelines simultaneously to reduce impact. Ineffective erosion control, unapproved stream diversion and sedimentation of rivers have damaged hundreds of salmon spawning rivers and tributaries. SEIC has revised its river crossings strategy but has failed to comply with the requirements of this strategy on a high percentage of sensitive rivers. Meanwhile, SEIC's pipeline design has failed to account for geohazards and river migration features of Sakhalin that will result in risks extending throughout the life of the project. NGO monitoring in October and December 2007 continued to find non-compliance with the required river-crossing and soil erosion management plans, raising concerns over the integrity of the pipeline system, especially in areas prone to seismic zones and landslides.

SEIC constructed one of the world’s largest liquid natural gas plant in the south of the island in Aniva Bay. In so doing, SEIC dredged the bay to deepen the access for tankers, and dumped the dredged materials in the middle of this fisheries-rich bay, refusing to dump the material in a less environmentally harmful location further out to sea. Fisheries have been disrupted, and SEIC did not accurately predict the impact on the bay ecosystem. SEIC did not adequately consult on the construction of a jetty in Aniva as required by Russian EIA law. The local shellfish beds suffered from damage from dumping of dredged material.

The LNG facility, combines with LNG and oil export terminals comprise the Pregorodnoye Production Complex, the construction and operation of which has caused degredation of air quality, noise disturbance, damage and loss of access to local fishing and recreation resources, declines in agricultural productivity and decreases in community and road safety, and loss of land value for local dacha owners. Despite this displacement, SEIC has not resettled dacha owners in compliance with Russian law, international finance institution policies, and corporate committments.

In October, 2007, SEIC announced that a new consultant report for potential lenders gives the project a "clean bill of health." However, this report actually reveals amongst other things systematic and chronic violations of policies and standards of potential international lenders and, by extension, the Equator Principles. An NGO critique of this report is available in the 'documents' section of this profile.

The construction and operation of the Sakhalin II Prigorodnoye Complex has caused pollution and physical damage to the Stroitel Association’s dachas and to their cultivated lands, which are located within the Complex’s Sanitary Defense Zone as approved by the Russian Ministry of Natural Resources.

 

 

 

Governance

Applicable norms and standards

Equator Principles

Timeline

WWF Campaign Against Sakhalin

2012-02-01 00:00:00

In February 2012 WWF initiated a campaign advocating the protection of the gray whale by floating a replica of a 33 foot long gray whale on the Thames River in London.  WWF is protesting against the Sakhalin oil and gas project in Russia.  Sakhalin Energy Investment Company is planning to build a third rig in the area; this additional rig was not taken into account in the original environmental impact assessment.  Environmentalists are worried that the construction of this rig will further push the gray whale toward extinction.

It is hoped that the campaign will get the attention of project lenders such as Credit Suisse, BNP Paribas, and Standard Chartered and that they do not support the financing of an additional rig.

For more information please click here.

Latest update

2008-07-18 00:00:00

The project is subject to various investigations by the Russian Authorities. The Russian Ministry of Natural Resources has found violations relating to protected forest being felled, water code violations associated with river and other damage, and risks of landslides. These findings confirm the problems documented by NGOs over recent years.

The Russian Audit Office has investigated the huge cost increases on the project (from $10 billion to $ 22 billion so far), which decrease and delay the revenue stream to the Russian government under the Production Sharing Agreement. The project is now built, and has caused damage to salmon spawning rivers and exposed endangered gray whales to excessive noise, potential ship strikes and pollution. The fisheries in Aniva have suffered and indigenous people and local communities have not been adequately consulted. Any investor will inherit the problems that have been built-in to the project, and cannot ignore the numerous breaches of the Equator Principles that have already occurred. Going forward the project suffers from inadequate measures to respond to oil spills in ice conditions. There are no proven response techniques that can give response all year round. Despite its remote location, the project has received significant coverage in the international media of the environmental and social problems and presents a significant reputational risk. Any finance institution involved in the project risks being held responsible for potential extinction, along with other long-term damage to the environment and local economy and communities.

Financiers

Related companies

Gazprom Russian Federation show profile

Oil and Gas Extraction

Mitsubishi Japan

Mitsui Japan

Sakhalin Energy Investment Company (SEIC) Bermuda

Shell United Kingdom show profile

Oil and Gas Extraction | LNG Terminal | Pipeline Transportation of Crude Oil | Pipeline Transportation of Natural Gas

News

| |
Type:
Year:
blog
external news
our news

Shell and Gazprom Scrap Dangerous Sub-Arctic Offshore Oil Drilling Platforms

2013-10-18 | Pacific Environment website
blog
external news
our news

NGOs seek Sakhalin compensation from Shell, UK banks (Subscription required)

2012-08-01 | Sakhalin Island, Russia | Environmental-Finance
blog
external news
our news

Complaint seeks resettlement and compensation from Shell and UK banks for damage caused by Sakhalin II oil and gas project

2012-07-31 | Sakhalin Island, Russia | Pacific Environment
blog
external news
our news

Barclays, HSBC and RBS linked to 'dirty financing' for fossil fuels

2011-06-14 | The Ecologist
blog
external news
our news

Oil platform could put critically endangered whales at risk

2011-01-24 | Practical Fishkeeping
blog
external news
our news

Oil Rush in Gray Whales’ Last Redoubt

2010-09-29
blog
external news
our news

Sakhalin-II has pumped oil and gas for one year without proper approval for the main pipelines

2009-10-20 | Sakhalin, Russia | Pacific Environment
blog
external news
our news

Oil and gas consortium will suspend seismic activities to protect gray whales

2009-04-24 | Geneva, Switzerland | Pacific Environment
blog
external news
our news

Cri d’alarme de l’UICN pour les baleines : BNP Paribas doit quitter Sakhaline II

2009-03-02 | Paris | Les Amis de la Terre
blog
external news
our news

Environmental Groups Urge Exxon Executive to Re-route Sakhalin I Oil Pipeline

2008-07-09 | San Francisco, US | Pacific Environment
blog
external news
our news

Environmental groups condemn Japanese and French banks for financing Sakhalin II oil and gas project in Russia

2008-06-17 | Tokyo, San Fransisco, Moscow, Nijmegen | Pacific Environment
blog
external news
our news

Japanese Banks Blasted for Investment Plans in Sakhalin II

Banks to Stay out of Environmentally Unsound Oil and Gas Project in Russia
2008-06-12 | Tokyo | Friends of the Earth Japan
blog
external news
our news

Environmental Victory for Sakhalin II

Project sponsor announces it cannot get financing from US and UK Export Credit Agencies
2008-03-04 | London, Washington, Sakhalin | Pacific Environment
blog
external news
our news

NGOs Call on Royal Bank of Scotland to recall Loan on Sakhalin II

Loan for controversial oil and gas project passed on to RBS
2008-01-17 | Edinburgh, London | Pacific Environment
blog
external news
our news

Sakhalin II: new environmental violations brought to light

Banks once more warned for risks of being involved
2007-06-27 | United States of America | Pacific Environment
blog
external news
our news

ABN AMRO Financing for Sakhalin II Poses Huge Risk for Potential Buyers

2007-04-26 | The Hague | Pacific Environment
blog
external news
our news

Oil for Germany, at any cost

New report on role of German banks in Russian oil sector
2006-10-04 | Berlin, Germany | Urgewald
blog
external news
our news

Sakhalin II: Six banks face serious decision

now that the Russian government has revoked the environmental permits
2006-09-15 | London, United Kingdom | Pacific Environment
blog
external news
our news

Global banking giant ABN AMRO awarded for environmental hypocrisy

Dutch bank violating commitment to the environment by bidding on biggest oil drilling project in history
2006-05-11 | San Francisco | Milieudefensie
blog
external news
our news

Shell poses unacceptable oil spill threat

2006-04-28 | London | Pacific Environment
blog
external news
our news

Dutch banks under pressure not to finance Russian oil and gas project

2006-04-27 | Amsterdam, The Netherlands | Milieudefensie
blog
external news
our news

Shareholders protest against ING investments in human rights abuses

Critical questions during the ING Annual General Meeting
2006-04-25 | Amsterdam, The Netherlands | Netwerk Vlaanderen
blog
external news
our news

Bankers and Oil Barons Schmooze EBRD President Lemierre at Davos

2006-01-01 | Davos, Switzerland | Berne Declaration
blog
external news
our news

ABN AMRO wins Hypocricy Award

Funding Sakhalin II incompatible with being a sustainable bank
2005-11-12 | Amsterdam, Netherlands | Milieudefensie
blog
external news
our news

Banks urged to back off from Sakhalin II

Sakhalin II crucial test for Equator Principles
2005-07-20 | Utrecht | Pacific Environment
blog
external news
our news

CSFB Shamed For Funding Whale Extinction

2005-04-05 | Zurich | Berne Declaration
blog
external news
our news

Equator Principles: Principles, Profits or just PR?

NGOs ask hard questions at anniversary of Bank Standards
2004-06-03 | Amsterdam, The Netherlands | Friends of the Earth US

Documents

Type:
Year:
ngo documents
2010-11-18 00:00:00

“The Good Neighbor” Or the continuing story of one resistance movement

2010-11-18 00:00:00 | Sakhalin Environment Watch
other documents
2009-10-20 00:00:00

Sakhalin-II has pumped oil and gas for one year without proper approval for the main pipelines

2009-10-20 00:00:00 | Sakhalin Environment Watch
ngo documents
2009-06-15 00:00:00

European banks financing controversial companies

2009-06-15 00:00:00 | Profundo
correspondence
2009-03-04 00:00:00

Letter to IUCN

2009-03-04 00:00:00 | Pacific Environment
ngo documents
2007-11-07 00:00:00

Material Breach: Widespread non-compliance revealed in consultant report on Sakhalin II

2007-11-07 00:00:00 | Pacific Environment, Sakhalin Environment Watch
ngo documents
2007-03-12 00:00:00

The Oil & Gas Bank - RBS & the financing of climate change

2007-03-12 00:00:00 | Platform
other documents
2005-06-30 00:00:00

CSFB asked to back off from Sakhalin II; Crucial test for Equator Principles

2005-06-30 00:00:00 | RAN, Pacific Environment
other documents
2005-06-20 00:00:00

FinancialTimes advertisement on Sakhalin II

2005-06-20 00:00:00 | RAN, Pacific Environment
our publications
2005-04-25 00:00:00

Sakhalin II gas and oil project

Further Breaches of Equator Principles May 2004 – March 2005
2005-04-25 00:00:00 | Platform, BankTrack
other documents
2005-04-05 00:00:00

CSFB Shamed For Funding Whale Extinction

2005-04-05 00:00:00 | Berne Declaration, Greenpeace Switzerland and BankTrack
ngo documents
2004-05-01 00:00:00

Principal Objections: Analysis of the Sakhalin II oil and gas project’s compliance with the Equator Principles

2004-05-01 00:00:00 | Platform

Media

Sakhalin-II pipelines

Sakhalin II oil and gas project

Critically Endangered Western Gray Whale River Crossings in too deep Erosion problems on steep slopes LNG plant development adjacent to local beach and fisheries Critically Endangered Western Gray Whale Protest by local communities at the LNG plant, January 2006 Molikpaq platform in winter ice conditions Erosion around recently installed pipes Foggy conditions at Piltun make whale observers useless River channels were redirected contrary to permits affecting spawning areas Ongoing erosion problems on exposed slopes Erosion control measures cannot cope with spring flmeltwaters Pipeline is engulfed by high river levels Diggers blocking off flow in streams contrary to permits Illegal Jetty built by Sakhalin Energy without consultation as required by Russian law Construction bridge washed away by river, summer 06 Endangered Steller Sea Eagle

Sakhalin action at Credit Suisse Zuerich








Video links

http://video.google.com/videoplay?docid=-4410246882894558123&q=sakhalin&hl=en

Links

WWF UK Sakhalin pages

http://www.panda.org/about_wwf/where_we_work/europe/where/russia/sakhalin/index.cfm

Pacific Environment

http://www.pacificenvironment.org/article.php?list=type&type=24

Sakhalin Environment Watch

http://www.sakhalin.environment.ru/en/index.php

CEE Bankwatch- Sakhalin Environmental Watch

http://bankwatch.org/office/sakhalin-environmental-watch
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