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Sakhalin pipeline victory for campaigners

Sakhalin Energy has given in to four years of environmental campaigning and announced the withdrawal of its request for government backing for its controversial oil and gas project in the Russian Far East.

The Sakhalin II project, a multi-billion dollar undertaking to construct oil and gas platforms and an 800km pipeline across the island of Sakhalin, is threatening the critically endangered Western Gray Whale with extinction.

For the last four years Sakhalin Energy, a conglomerate of oil companies led by Shell (and latterly Gazprom), has sought UK government support for the project and the announcement that it has withdrawn its application for support is a major environmental win.

"WWF is delighted that Sakhalin Energy's application for financial backing from the UK government has proved unsuccessful," says JamesLeaton, Oil and Gas Policy Advisor for WWF. "The fact that the company has been unable to secure financial support despite four years of deliberation demonstrates the flaws that are built into this project."

WWF has been lobbying the UK Government to ensure that the project did not receive support from the Export Credits Guarantee Department (ECGD) - the government body responsible for underwriting British industry overseas.

"The Sakhalin II project has raised a number of issues around how ECGD conducts its business," James Leaton continues. "It is imperative that ECGD reviews how it can prevent wasting resources on unsustainable oil projects, and ensure it contributes to Government commitments on sustainable development."

Banks warned

Now that the company is no longer seeking financial backing from the ECGD, or from the US Export-Import Bank, other financial institutions are being urged to refuse any requests that may be made for their financial support of the project.

"Sakhalin Energy has tried for four years to get UK and US public finance for this project, but it has failed to meet the various standards required," says James Leaton, Oil and Gas Policy Advisor for WWF-UK. "Now that the company has indicated that it will be seeking finance from elsewhere, WWF stresses that it is vital that any bank considering giving finance to Sakhalin II is aware of the ongoing social and environmental problems facing the project.

"There are no effective techniques for cleaning up an oil spill in the winter ice conditions in Sakhalin and the world's 120 remaining gray whales are being further imperilled by the project. Essentially, any bank who considerssupporting this project into the future will be inheriting an environmental disaster waiting to happen."

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