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The Guardian: Russia denies ulterior motives over Sakhalin

· Permit withdrawn ‘for ecological reasons’
· Official says no political or economic issues involved

Tom Parfitt in Moscow and Terry Macalister
Wednesday September 27, 2006

A senior Russian official has hit back at western accusations that Moscow is deliberately raising environmental obstacles against Shell and other foreign companies as part of a political mission to seize back control of energy reserves.

In an interview with the Guardian, Oleg Mitvol defended the government’s decision last week to revoke a 2003 environmental assessment that approved the development of huge oil and gas reserves off Sakhalin Island in the Russian far east.

“There is nothing about business or political interests here. There are only ecological problems on Sakhalin,” said Mr Mitvol, who is deputy head of the natural resources ministry’s inspectorate.

The decision to annul the permit held by the Shell-led consortium developing the project provoked howls of protest in London, Brussels, Washington and Tokyo.

On Monday, the ministry went further, ordering a month-long inquiry that officials said could lead to demands for Shell and its partners to make hundreds of millions of dollars in “improvements”.

Operating without an environmental permit is illegal and Mr Mitvol said a court ruling to halt the project could be sought if the consortium did not comply with new demands. But he rejected claims that Moscow was leaning on the foreign companies developing Sakhalin-2 to make them give the state-run gas monopoly Gazprom a slice of the project on favourable terms. “Recently BP had similar [ecological] problems in Alaska and no one shouted that the Americans simply wanted to replace BP with an American company,” he said. “But when it happens in Russia, these fantasies are invented.”

Mr Mitvol accused Sakhalin Energy, the consortium in which Shell holds a controlling stake, of willfully ignoring environmental regulations in building a pipeline and other developments on Sakhalin. He said streams important to spawning fish had been disrupted and “enormous damage” had been caused to forests.

“Instead of rectifying these ecological problems, they are organising political pressure on us,” he added. “I think [Shell] are doing the wrong thing and damaging the interests of British business.” Sakhalin Energy denies breaking any regulations.

Mr Mitvol’s agency announced on Monday that he would lead a delegation of government officials, ecologists and foreign diplomats to Sakhalin today to view the alleged damage to the island.

Gazprom and Sakhalin Energy had been in talks over an asset swap that would see the former get 25% of Sakhalin-2 and the latter receive some cash plus 50% of Gazprom’s Zapolyarnoye gas field in the Arctic. The talks were recently suspended.

BP is also under pressure in Russia. It has been warned that it could find its permit to exploit the huge Kovykta field in Siberia rescinded if it does not improve its operational record. Gazprom expressed an interest in getting involved in this too.

There is also growing tension over a third scheme, Shtokman in the Barents Sea, where Gazprom is deciding on a foreign partner. The hopes of the US oil firms Chevron and ConocoPhillips to win this were undermined at the weekend when the Russian president, Vladimir Putin, said much of the gas could go to Europe. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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