Financial Times: LETTER FROM THE EUROPEAN BANK FOR RECONSTRUCTION & DEVELOPMENT: EBRD has yet to decide if it will endorse Sakhalin II: “…it is already clear that Shell has failed to comply with some of the EBRD's rigorous environmental procedures…”: “The question now is, should the EBRD endorse the project and extend a loan and, by extension, an imprimatur.”: Monday 9 January 2006

By Brigid Janssen

Published: January 9 2006

From Ms Brigid Janssen.

Sir, With reference to Doug Norlen's letter (January 5): Sakhalin II, the project to exploit petroleum reserves under the icy waters off Russia's east coast is about to become one of the biggest oil and gas developments in the world. Its main investor and operator, Shell, would like the European Bank for Reconstruction and Development to help finance the project, bringing a small amount of money and a large amount of endorsement that, in turn, could attract billions of dollars of financing from other banks and public institutions. The EBRD is currently seeking the public's view before making a decision.

While it is already clear that Shell has failed to comply with some of the EBRD's rigorous environmental procedures, it has improved practices with a view to obtaining the EBRD's financing. Shell has actively sought the involvement - and scrutiny - of the EBRD in a project that will certainly be completed, with or without the constraints that an international organisation would impose.

The question now is, should the EBRD endorse the project and extend a loan and, by extension, an imprimatur.

Some environmentalists argue that Sakhalin II is unworthy of public financing. Others consider that a public institution has a critical policing role on a project that will become a benchmark for industry practice, especially drilling in Arctic conditions. The EBRD can set standards and reflect the concerns of communities and non-governmental organisations to make a better project. Already Shell has changed the routing of the underwater pipeline to accommodate a rare species of whale and created an independent panel of respected whale experts. And it has agreed to extensive performance monitoring and much-upgraded plans for crossing and rehabilitating 1,000 salmon-spawning rivers on Sakhalin Island.

After an extensive public consultation, the EBRD will decide if it is has a genuinely useful role in balancing the corporate goals of developing a vast energy project against the interests of people who need new secure supplies of energy, the Russian people who can benefit from development and the environment.

Brigid Janssen,

Director of Communications,

European Bank for Reconstruction and Development,

London EC2A 2JN, UK

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