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Putin unlikely saviour of endangered grey whales

With tens of billions of petrodollars floating in limbo, there are no runaway winners in the long and nasty battle over who will ultimately control the lucrative oil and gas deposits around Russia's remote Sakhalin island.

Unless, of course, you count the approximately 100 grey whales -- the only ones of the species left on Earth -- swimming idly off its shores in the frigid waters of the northern Pacific Ocean.

These whales are the last of a seriously endangered species but they have found an unlikely, but formidable ally in what is, literally a life and death struggle to avoid extinction: Russia's inscrutable President Vladimir Putin.

"I don't think anybody's accused Mr. Putin of being a raging environmentalist," said Francis Grant-Suttie, director of private-sector relations with the World Wildlife Fund in Washington.

"At the same time, he watched his government take a very active, hands-on role with how energy in Russia is being managed."

Putin has become the unlikely savior of grey whales -- whether he cares for them or not -- because of a bitter legal dispute that has raged for several months between the Kremlin and an international consortium led by Royal Dutch Shell.

At stake is control of the $20-billion Sakhalin-2 oil and gas project, the largest foreign investment venture in Russia's booming energy sector.

Russia wanted to renegotiate its profit-sharing agreement with Shell because overruns have doubled the cost of the project from an original $10 billion. That has serious implications for the Kremlin because under its original deal with Shell, it won't see a penny until the foreign investors recover their full costs first.

Russia first signed the agreement back in 1994 when it was poorer and weaker following the collapse of the Soviet Union. But as far as Shell and its two Japanese partners were concerned, a deal was a deal.

So Putin, the former KGB spy turned politician who has never been sold short on his ability for tactical thinking, played the environmental card: Russia essentially froze the project by saying the company had violated several of its environmental laws.

Russia concluded that Sakhalin-2, among other things, was damaging grey whale feeding grounds off the island and that its pipelines would pass through ecologically sensitive areas.

Shell and many analysts cried fowl, accusing the Kremlin of masquerading as environmentalists in name of a cash grab.

After all, this came after Russia cut gas supplies to the Ukraine, sparking widespread international condemnation that the Kremlin was wielding energy as a political weapon. Analysts say this is all part of a scheme to ensure that Russia's state-own energy firm Gazprom can gain a controlling interest in Sakhalin-2.

By mid December, reports emerged that Gazprom had finally managed to secure a majority stake in Sakhalin-2.

But to environmentalists, much of this is beside the point.

As the head of the WWF's Russia branch, told Britain's Guardian newspaper recently: "We are prepared to be prostitutes with anyone if the end result is protection of the environment."

Russia's Natural Resources Minister Yury Trutnev has been one of Putin's key point men in waging what has become a public relations battle.

On a visit to Ottawa in early December, Trutnev rejected the suggestion that his government is more concerned about getting a cut from Sakhalin-2 than saving whales.

"The truth is that the company that is violating our environmental laws is exerting political pressure on the Russian government, trying to spin its activities E trying to tell the world the Russian government is trying to worsen the investment climate," replied Trutnev. "The companies that are implementing projects that are worth billions of dollars have enough money in the bank to use mass media to misinform the public."

Trutnev maintained that "a significant number of Russian laws protecting the environment were broken" and that Shell and its partners likely wouldn't be able to do anything to fix the damage.

"They'll simply have to pay money," Trutnev stated, without providing a figure.

"Russian environmental legislation is not as strict in its requirements as the environmental legislation of developed countries," Trutnev explained. "But even under these circumstances, the Sakhalin project has violated legislation in a quite barbaric way."

Many financial analysts disagree. They say it's just another example of Russia playing hardball with its mushrooming energy sector, and creating an unfriendly climate for foreign investment. The Economist magazine, for instance, this month accused Putin of "threatening dire consequences for minor environmental lapses."

But environmentalists would hardly characterize the violations as minor. They argue there is great danger to the grey whale population and surrounding marine life, and that energy companies should stay out of pristine areas such as the Sakhalin, or the North American Arctic, for that matter.

The World Conservation Union, a scientific group that bills itself as an "impartial convener" in the dispute, but one that is dedicated to the preservation of the grey whale, says it is encouraged by the Kremlin's environmental stand.

"We have just returned from a visit to Moscow during which we received strong support for our work from the Ministry of Natural Resources," said Dr. Julian Roberts, head of the organization's grey whale preservation program.

The WWF's Grant-Suttie said he tried to red flag the environmental pitfalls in meetings with senior Shell executives seven years ago, but he got the brush off.

Whales aren't the only marine life threatened by Sakhalin-2. While there are only 29 female whales left in that population of about 100, there has also been sizeable damage to salmon stocks, said Grant-Suttie, with pipelines going through more than 1,000 salmon tributaries and streams.

"We are not per se against the project -- we just say get it right for the people of the island, the economy of the island, the habitat and species."

So far the WWF has persuaded Shell to move its pipelines around the whale feeding ground but the foundation for what will be a massive oil platform also needs to be relocated further out to sea. If it built on the current foundation, the combination of construction, sea traffic and waste from the platform will wipe out the grey whale feeding ground, he said.

Grant-Suttie said it is not clear whether a Russian-led consortium would do enough to protect the natural habitat of the region, but they certainly can't do much worse.

"We think that the Russian companies might just do a better job. They've gotten the message loud and clear," he said.

"It puts the Russian government under the spotlight. It puts everyone under the spotlight to help figure out a way to protect these habitats and species."

© Ottawa Citizen

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