Friends of the Earth: Shell Warned on Dangers to Whales of Sakhalin Project: Independent report findings threaten international financing of Sakhalin II: “The groups have also criticized Shell for withholding information that the scientific panel needed to conduct a complete review of the Sakhalin project's impacts on gray whales.”: “"This is a glaring example of Shell's concealment of public interest information about the negative environmental impacts of Sakhalin II…" (ShellNews.net) 17 Feb 05

An independent international panel of experts convened by the World Conservation Union today issued Shell with strong warnings about the negative impacts of the oil major's Sakhalin II project [1] on the endangered western gray whale. The International Scientific Review Panel (ISRP) [2] was also critical of Shell's lack of necessary documentation and data related to key aspects of its USD 12 billion oil and gas development.

The controversial Sakhalin II oil and gas project at Sakhalin Island in the Russian Far East threatens the western gray whale with extinction through potential off-shore platforms and undersea pipelines located amidst the whales' only feeding grounds. Citing the questionable effectiveness of Shell's proposed mitigation measures, the ISRP concludes, "The most precautionary approach would be to suspend present operations and delay further development of the oil and gas reserves in the vicinity of the gray whale feeding grounds off Sakhalin, and especially the critical nearshore feeding ground that is used preferentially by mothers and calves."

The ISRP's report details how Shell's Sakhalin II project increases the critically endangered gray whales' risk of extinction through construction and operation impacts including ship collisions, oil spills, and noise.

Environmental groups are calling on Shell to immediately halt oil production at its existing Molipak platform and to delay a proposed new platform and associated pipeline construction until it can demonstrate that these activities will not lead to the extinction of the western gray whales. The groups have been urging Shell to move the new platform at least 12 miles from shore - which would provide greater protection for gray whales while still allowing Shell to conduct oil drilling operations.

The independent panel pointed out that Shell could choose to make its Sakhalin II project safer for the gray whales by relocating the proposed new platform. It states, "Clearly, from the perspective of gray whale conservation, the further away the platform is from the foraging grounds the better."

"If Shell is really concerned about gray whales, then it only has one choice: to halt the project and change its design to protect western gray whales," said David Gordon, Executive Director of Pacific Environment, an NGO that monitors Sakhalin oil development.

The groups have also criticized Shell for withholding information that the scientific panel needed to conduct a complete review of the Sakhalin project's impacts on gray whales. The independent panel's report refers repeatedly to Shell's "information gaps" and states, "The Panel was precluded by a lack of information and specificity from completing a comprehensive review of a number of important Sakhalin II Phase 2 elements."

"This is a glaring example of Shell's concealment of public interest information about the negative environmental impacts of Sakhalin II," said Petr Hlobil of CEE Bankwatch Network. "The conclusions from today's report should give international finance institutions pause for serious reflection as they reconsider whether to finance the risky Sakhalin II project."

Environmental groups also called on international financial institutions considering support for the Sakhalin II project to reject financing a project that is likely to lead to the extinction of western gray whales.

Friends of the Earth Sakhalin Campaigner Nick Rau said, "Given the evidence put forward by the panel, there is no way that any financial institution committed to good environmental practice can justify providing funding for this project. Taxpayers money must not and should not be used to finance the destruction of the western grey whale."

In 2003 the European Bank for Reconstruction and Development (EBRD) determined that the Sakhalin II project's Environmental and Social Impact Assessment is "unfit for purpose" and said that it will not finance the project unless fundamental social and environmental problems are resolved. Support is also being considered by Japan Bank for International Cooperation, the U.S. Export-Import Bank, and the U.K. Export Credits Guarantee Department. A total of USD 5 billion is being sought from these public lenders.

"The panel points out that the loss of one additional adult female per year would be sufficient to drive the population towards extinction with high probability," said Doug Norlen of Pacific Environment. "Public banks shouldn't finance extinction."

The ISRP is intended to inform decision-makers including the EBRD and export credit agencies (ECAs) whether adequate analysis has been conducted to justify reconsidering financing for Sakhalin II. Aside from project impacts on the endangered gray whale, the EBRD and ECAs have fundamental concerns about a larger set of social and environmental impacts of the land-based portions of the project, including its impacts on wild salmon and the fisheries of local communities and indigenous people, the damage to community infrastructure, and the risk of catastrophic oil spills from export tankers in treacherous waters.

"While Shell fixates on its financial returns, the western gray whale is at the point of no return," said Dmitry Lisitsyn, Chairman of the Sakhalin Island-based Sakhalin Environment Watch.

Notes:

[1] Royal Dutch Shell is the Operator of the Sakhalin Energy Investment Company (SEIC), a project company undertaking the USD 12 billion Sakhalin II project. Minority partners include Mitsubishi and Mitsui.

[2] The International Scientific Review Panel, commissioned by the International Union for the Conservation of Nature, includes internationally renowned experts in whales and off-shore oil and gas projects. To review the Panel's report, see: http://www.iucn.org/themes/business/Docs/ISRP_Report_with_covers_low_res.pdf

For more background information on the Sakhalin II project's controversies visit: http://www.sakhalin.environment.ru/en/

http://www.pacificenvironment.org/russia/sakhalin.htm

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