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Vedomosti: Eni subsidiary accused of environmental violations on Sakhalin

It has now become clear why Italian energy firm Eni was so alarmed by the environmental conflict around the Sakhalin 2 energy project in Russia’s Far East. One of its subsidiaries is a project contractor, and is accused of illegal deforestation by the Russian environmental authorities. The General Prosecutor’s Office will now look into the matter.

Eni had planned to sign an agreement on cooperation in Europe and an asset swap with Russian gas giant Gazprom on October 15. However, on Wednesday its CEO, Paolo Scaroni, said the deal could be postponed due to the pressure the Russian authorities were putting on Western energy companies.

Yesterday it became clear why he was so worried about foreign investors working on the island of Sakhalin in Russia’s Far East, when the Federal Service for the Oversight of Natural Resources attacked its ‘granddaughter’ company Starstroi. Information on “numerous cases of illegal forest felling… and the destruction of the rich soil layer during the construction of coastal pipelines” where Starstroi is the contractor have been submitted to prosecutors, the service announced.

“It is now up to investigations to determine who is to blame for these violations, Sakhalin Energy or Starstroi, and who will compensate for the damage,” said Oleg Mitvol, the service’s deputy head. His officials estimate damage of at least 50 million rubles, he said.

A spokesman for Starstroi declined to comment.

An Eni spokesman denied the accusations. “Our contractor worked in compliance with all environmental standards, and the certificate issued to its client, Shell,” he said.

Nevertheless, it took Scaroni just two days to change his mind about the agreement with Gazprom. Yesterday he said the talks were difficult, and that he would arrive in Moscow as planned on October 15 only if “the sufficient level of confidence that the agreement will be signed is achieved.”

“Talks with the Italian company are progressing as planned, and Gazprom and Eni are equally interested in the agreement,” said a Gazprom representative involved in drafting the document. A source in Eni confirmed this.

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