Eric Watkins
Senior Correspondent
LOS ANGELES, Jan. 18 -- The World Wildlife Fund (WWF) has urged international lending institutions to follow the lead of the European Bank for Reconstruction & Development and not provide loans for the Sakhalin-2 project due to environmental concerns.
"The WWF and other international organizations have appealed to potential Sakhalin-2 sponsors to adopt the correct environmental position and follow the example of the European Bank for Reconstruction & Development, which refused to provide the project with $300 million in financing on Jan. 11," WWF said in a statement.
It said credit export agencies in Japan, the UK, and the US, as well as a number of private banks like ABN Amro, Royal Bank of Scotland, and Mizuho are still considering the Sakhalin-2 project for a loan of up to $10 billion.
WWF said other companies could finance the project "only if they sacrifice their principles for providing loans, or make them less strict, because the project is already almost completed and many flaws are already impossible to rectify, for example, the technology for onshore pipeline construction."
In December, following investigations by Russia's Federal Service for Supervising Natural Resources (Rosprirodnadzor), OAO Gazprom agreed to acquire, for $7.45 billion, a 50%-plus-one share stake from Sakhalin-2 project operator Sakhalin Energy Investment Co. Ltd.—Royal Dutch Shell PLC, Mitsui & Co., and Mitsubishi Corp.
Since then, Rosprirodnadzor deputy head Oleg Mitvol said Gazprom is expected to submit a plan, possibly in February, to remediate violations of environmental laws in relation to the Sakhalin-2 project.
"We had a meeting with Gazprom before New Year and agreed that the company would present to us a mitigation plan related to the project. Tentatively it should happen in a month's time but we did not set any clear deadline," he said.
Mitvol said the results of Rosprirodnadzor's inspection of Sakhalin-2 were announced in November. He said a cost estimate will be made—perhaps this summer—of the damage caused by the violation of environmental laws by the project's operator.
Meanwhile, on Jan. 17, international nongovernment organizations reportedly sent a letter to Gazprom proposing to start constructive dialogue to bring the Sakhalin-2 project into compliance with Russian legislation and international environmental and social standards.
Contact Eric Watkins at [email protected].
