|
EBRD launches consultations on Sakhalin II oil and gas project
The EBRD will consult the public before deciding whether to provide financing
for the Sakhalin Energy Investment Company to develop the world’s biggest oil
and gas project, off the coast of Sakhalin Island in the Russian far east.
The EBRD considers that the company’s extensive documentation on
environmental, social, health and safety impacts of Sakhalin II (Phase 2) is
‘fit for the purpose of consultation’. Sakhalin Energy’s latest Environmental
Impact Assessment will now be published and the general public will be invited
to comment, providing important input to determine if the project could meet
the Bank’s basic banking and environmental requirements and be eligible for
financing.
The second phase of Sakhalin II involves construction of two production and
drilling platforms offshore, and pipelines that would run underwater to the
northern tip of Sakhalin Island, and then overland to the southern end of the
island to oil and gas export terminals and a Liquefied Natural Gas plant.
Sakhalin Energy-- which is held 55% by Shell, and 25% and 20% respectively by
the Japanese corporations Mitsui and Mitsubishi -- has asked for financing of
Sakhalin II (Phase 2) from the EBRD, which financed Phase 1 in 1997.
The EBRD Board of Directors will not make a decision on whether to finance
Phase 2 until it assesses the findings of the 120-day consultation with the
local community, NGOs, and other interested parties. The EBRD will also be
monitoring closely the performance of Sakhalin Energy during the consultation
period. The EBRD’s decision is expected to influence the financing decisions
of some other potential lenders, including public institutions and private
banks which adhere to the Equator Principles, a framework for incorporating
environmental and social considerations into project financing.
The EBRD and other potential lenders have required Sakhalin Energy to bring
its current Environmental Impact Assessment up to a standard that allows the
public to be able to comment meaningfully on the documentation and the
mitigation measures to redress potential damage.
In particular, there were serious concerns about the impact on the Western
Gray Whale population, which feeds in waters near an offshore platform. The
EBRD and other potential lenders also required extensive improvements in the
approach to pipelines crossing more than 1000 rivers and streams on the Island.
On both these concerns, the EBRD recognises that procedures prescribed in its
Environmental Policy were not fully followed in the planning phases. The
documents for consultation include elements that address these departures from
the policy.
For example, Sakhalin Energy has rerouted the underwater pipeline to minimise
damage to the whale habitat and is now working with the advice of a panel of
internationally respected whale experts who are monitoring and advising on the
impact that the installations could have on the rare Western Gray Whale. They
will have the opportunity to monitor the whales’ reaction to the most
sensitively-located platform through a full season before the topside
equipment is installed on the platform in 2007. There is also scientific
analysis indicating that the final site of this platform is the most
environmentally sound although the decision-making process to choose the site
was not in conformity with the Policy.
Equally, Sakhalin Energy has revised its river-crossing strategy and set in
place rigorous measures for monitoring programmes to protect the prolific
salmon population that spawns in the Island’s waterways. There are now
environmental performance tests built in to all future phases of pipeline
construction, and there is a commitment to rehabilitate streams to redress
past damage. The EBRD is seeking comment on the updated river-crossings
documentation and how the revised strategy and control measures address the
initial problems.
Another area of concern is dumping of dredged material from construction of a
jetty into Aniva Bay because alternative disposal sites were not properly
considered. The final dumping location must be judged in the light of
tradeoffs between environmental and safety risks. Equally the preparation of a
plan for indigenous people was not prepared according to timing prescribed by
the Policy, but international experts are now developing a plan that aims to
be best practice.
The EBRD will gather the views of local people and the wider interested
public, based on the EIA documents, which are released without the EBRD’s
comment or endorsement. The public consultations will take place in February
in Korsakov, Yuzhno-Sakhalinsk and Nogliki on Sakhalin Island and Sapporo on
the nearby Japanese island of Hokkaido. Meetings are also planned for Moscow
and London to hear the views of NGOs and other international entities.
The EBRD Board of Directors will consider the findings of the consultations
along with the financing structure, technical information and Sakhalin
Energy’s performance during the consultation period if it is asked to make a
decision on whether to finance the project.
Core and background information about the EBRD's potential involvement in
the Sakhalin II
(Phase 2) project.
|
