The Moscow Times: EBRD to Consult Public on Sakhalin: “The European Bank for Reconstruction and Development will put off its decision on whether to support the $20 billion Russian natural gas venture led by Royal Dutch Shell for another four months, the bank's chairman said Wednesday. "We are going to launch public consultation ... this process will take 120 days,": "Today the EBRD has risked putting its reputation beyond repair by pronouncing that Sakhalin II is fit for purpose even though key aspects of the project are beyond repair. ...120 days of consultations will make little difference to the huge fundamental violations that Shell has committed already.": Thursday 15 December 2005

The European Bank for Reconstruction and Development will put off its decision on whether to support the $20 billion Russian natural gas venture led by Royal Dutch Shell for another four months, the bank's chairman said Wednesday.

"We are going to launch public consultation ... this process will take 120 days," EBRD chairman Jean Lemierre said in a televised conference. "It does not mean we have taken decision to finance the project," he added.

Shell, which is developing oil and gas fields off Sakhalin island in the Far East under the so-called Sakhalin-2 project, needs EBRD support in order to get funding from other banks. Shell's partners in the Sakhalin-2 consortium are Mitsui & Co. and Mitsubishi.

The bank's financing is controversial due to the potential environmental impact of the project. Environmental groups slammed the EBRD for continuing to look at the project.

"With one swift move EBRD has squandered the credibility it has spent years to build," said Doug Norlen, Policy Director, Pacific Environment said in a statement.

Last summer EBRD said that Sakhalin-2 project was "unfit" due to numerous environmental concerns, but the new documents presented by the consortium have been changed and improved, Lemierre said.

The project has drawn a lot of criticism from environmental groups due to the risk to the few remaining Western Gray whales, as well as the environmental impact on the local community.

Lemierre could not say how much the EBRD would be willing to commit to Sakhalin-2 if its board approves the project. "The order of magnitude some people may have in mind is a few hundreds of millions of dollars, two or three," he said.

If the Bank rejects its support for Sakhalin-2, it could make financing more difficult, Lemierre said.

"I am pleased with EBRD's announcement, which reflects the rigorous environmental and social standards adopted by the company," Ian Craig, chief executive of the project operator Sakhalin Energy said in a statement.

Dmitry Lisitsyn, Chairman of the leading local group Sakhalin Environment Watch, said: "Today the EBRD has risked putting its reputation beyond repair by pronouncing that Sakhalin II is fit for purpose even though key aspects of the project are beyond repair. ...120 days of consultations will make little difference to the huge fundamental violations that Shell has committed already."

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