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Wednesday, July 11, 2007

GAZPROM, Quite Literally, Stinks

The Moscow Times reports on the Putin adminstration's laughably hypocritical environmental policy. Only foreigners, it seems, can be polluted. How neo-Soviet can you get?

For several months last year, Shell fought off daily accusations that its construction of the giant Sakhalin-2 oil and gas project was causing unspeakable damage to the land and animals of the far eastern island. Then, at a Dec. 21 Kremlin ceremony, welcoming Gazprom as a majority shareholder into the foreign-owned project, President Vladimir Putin declared that all of the island's environmental problems had been resolved. Yet with the summer thaw allowing for increased inspection of the project's work sites, environmentalists are now warning that Gazprom has done nothing to ease the damage and have renewed calls for project operator Sakhalin Energy to halt its construction work.

"I cannot say that anything is OK. Everything is probably worse than it was before," said Dmitry Lisitsyn, the head of Sakhalin Environment Watch, an environmental group based on the island.

The construction of an 800-kilometer pipeline that runs the length of the island is nearly completed, and Sakhalin Energy announced Thursday that it had inaugurated a third offshore drilling platform. It is the project's later stages that will see subcontractors confronted with the island's most difficult and sensitive terrain, including steep mountain slopes prone to landslides and mudflows in the face of intense construction work, environmentalists say. "It's like pupils who are doing their homework and leave the most difficult lesson for the end," Lisitsyn said by telephone from Yuzhno-Sakhalinsk, the island's capital.

The Natural Resources Ministry's prolonged campaign against Shell and its Japanese partners, Mitsui and Mitsubishi, was widely seen as a means of putting pressure on the firms to sell a majority stake in the project to Gazprom. After the sale of a stake of 50 percent plus one share in Sakhalin Energy was finalized April 18, the state's charges of environmental damage -- led by Oleg Mitvol, the deputy head of the ministry's environmental watchdog, appeared to simply melt away. The environmental campaign against Sakhalin Energy prompted sharp criticism from Western diplomats and analysts, who said the state had failed to act transparently as it began its moves to bring all major oil and gas projects under majority state control.

"Unfortunately, immediately after Gazprom entered the project, the activity of [the environmental watchdog] was significantly diminished," said one environmentalist involved in the campaign, who asked not to be identified. "It was just a show, to scare the companies and put pressure on them," the activist said. "It was very clear to me that it was a short-term but very noisy campaign against Shell. But we had no choice but to cooperate with them, and they knew it," the activist said. "It would have been wrong if we had stayed out of it."

Environmentalists have long been trying to draw attention to the problems on and around Sakhalin, a mountainous island whose rivers are home to spawning salmon and whose surrounding waters provide the only feeding ground for the region's endangered gray whale. This summer, the whales began arriving June 20, the day after the winter's last ice melted from the nearby Sea of Okhotsk. Environmentalists still cannot say for certain where the creatures, who reach an average of 22 meters in length, spend the winter months, but they flock to the sea each summer to feed on its crustaceans.

Activists with the World Wildlife Fund and the International Fund for Animal Welfare, both of which maintain observers on the island, say the noise of recent construction work has begun to scare the whales away. "The company made a commitment they would keep the noise under a certain level to prevent the impact on whales," but it hasn't, said Grigory Tsidulko, a marine mammal campaigner with IFAW. "This summer we started to hear lots of noise in the area -- this means there is even more noise underwater," he said. So far this summer, nine whales at most have been observed in the area, Tsidulko said. "Usually at this time of year we can count 12 to 16, but this summer was unusual in that the ice disappeared later than usual. We hope there will be more," he said. Sakhalin Energy spokesman Ivan Chernyakhovsky said the company was committed to protecting the island's environment. "Environmental responsibility is one of our top priorities," Chernyakhovsky said. "Nothing in our approach has changed" since Gazprom's entry into the consortium, he added. "We are still committed to minimizing any negative impact that might possibly be there." On Thursday, Sakhalin Energy said it had completed the installation of its third production platform at the site. "With this milestone, construction operations are nearing completion," the company said in a statement.

"The entire operation was executed to the highest safety standards and within the established noise levels, without any impact on the Western Gray Whale population," it said. A Gazprom spokesman declined to comment, referring all questions to Sakhalin Energy. The $20 billion project is due to begin exporting liquefied natural gas in 2008, sending key energy resources to markets in Asia and North America. Gazprom's entry into the world's largest integrated oil and gas project was seen as a strong symbol of the state's desire to reassert its control over energy resources, and signaled the company's desire to enter the lucrative LNG market. Yevgeny Shvarts, the head of WWF Russia, said Gazprom was ill equipped to deal with the environmental problems on the island. "It looks like Gazprom has some internal managerial problems -- getting actual and serious answers to anything is difficult, sometimes impossible," he said.

Another environmental activist involved in the campaign to save the gray whale agreed. "Gazprom has told us, 'We haven't yet communicated because we still don't know how to deal with Sakhalin Energy,'" said the activist, who also asked not to be identified. Several environmentalists interviewed for this article requested that they not be identified, citing the political sensitivity of the matter. Shvarts said Mitvol's agency was continuing to take an interest in the environmental situation on Sakhalin. "Oleg Mitvol has expressed the same worries as we have. At the same time we don't like to look like the hands of [the environmental watchdog]," he said. "Our goal is to protect the whales, and we don't like that it can be used for other purposes, like dishonest competition," he said.

Mitvol, who has championed his role as the country's leading environmental crusader, insisted that he would continue to be involved. "Our inspectors on Sakhalin are working with WWF and IFAW, particularly regarding the problems with whales," he said. "Of course we deal with Gazprom," he said, when asked how the new shareholder was responding to the problems there. "They've explained that the noise has been at the level that was agreed with the project." On Friday, members of IFAW and WWF met with Sakhalin Energy and Gazprom representatives to discuss the issue of the endangered gray whale. One participant said Gazprom had invited members of the environmental group Vernadsky Fund to the meeting and had encouraged them to take a leading role on the environmentalists' side. The fund, established in 1995, counts Gazprom among its founding members. No one at the fund could be reached for comment Friday.

Meanwhile, the activists continue to push Western banks to avoid funding the project. The European Bank for Reconstruction and Development dropped talks on providing loans for the project in January, just three weeks after Gazprom's entry into the project. "There's a question if this damage is permanent," said Lisitsyn, speaking in particular of the damage the mudflows have caused to the islands' hundreds of rivers and streams. "Unique environmental conditions demand unique construction solutions, and the company is not doing this," he said, warning of the possibility that the pipeline could rupture once the oil begins to flow. Nikolai Kazakov, the deputy director of the Far East Geological Institute on Sakhalin, also warned of the potential for pipeline ruptures. "There are very big problems with the protection of the pipeline's construction," Kazakov said by telephone from the island. "The company's policies in relation to this will lead to catastrophe."

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