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The Guardian: Shell hailed troubled gas project as world model

Terry Macalister and Rob Evans
Wednesday September 27, 2006

Shell told the British government earlier this year that the now troubled Sakhalin-2 project could become a model for future operations worldwide. The boasts were made by Shell UK’s chairman, James Smith, in a meeting with Hilary Benn, the international development secretary, and the European Bank for Reconstruction and Development (EBRD) in London.

Despite criticism about the scheme from green campaigners – and from the Kremlin in the past week – Shell said it had broken new ground by establishing Russia’s first offshore project and had handled the environment with care.

“James Smith hoped that Shell’s experience will help establish a road map for future operations in Europe and central Asia,” said a note of the meeting on January 11, made by the Department for International Development.

Shell is now engaged in a bitter fight with Russian authorities over its operational record at Sakhalin-2. The Russian ministry of natural resources says the project is damaging salmon streams and forests. It has announced plans to launch an environmental review of the Sakhalin development – the biggest liquefied natural gas project in the world.

The meeting with Mr Benn – details of which have been obtained by the Guardian under freedom of information rules – was requested by Shell to discuss its projects in the trouble-hit Niger delta as well as Sakhalin in Russia’s far east.

A government note of the meeting said: “James Smith noted that Shell viewed it as one of their most important projects that would have large implications for the world energy markets, as well as the Russian energy agenda.”

The EBRD is currently deciding whether Shell’s environmental and social record at Sakhalin is good enough to warrant public money being given to the project. The group Bankwatch, which monitors the environmental and social impacts of development finance, cites an increase in social problems in Sakhalin as a result of hundreds of oil workers arriving there.

Shell said it had regular briefings with ministers, but declined further comment. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.

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