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EBRD shouldn’t fund Shell’s Sakhalin project


28 Feb 2006, London, UK – WWF is urging the European Bank for Reconstruction and Development (EBRD) not to fund Shell’s Sakhalin II project in Russia’s Far East.

In its submission to the EBRD’s public consultation, WWF has highlighted where the project’s environmental and social standards fail to stand up to those the Bank was founded on.

“WWF believes that if the EBRD funds this project it will be opening the door to lower environmental and social standards across the region it is trying to develop,” said Robert Napier Chief Executive of WWF-UK.

“Shell has had three years to resolve the issues highlighted with Sakhalin II but the simple truth is that this proposal doesn’t stand up to detailed scrutiny. If the EBRD goes ahead taxpayers money will be used to fund a project that the Bank has already admitted does not meet its policies.”

In admitting that the project doesn’t meet its policies, WWF is concerned that the EBRD is contradicting previous Bank statements that say “every project proposed for EBRD funding must comply with the Bank’s environmental policy” and that it “sets new standards in environment”.

“If the Bank funds Sakhalin II there is serious potential for not only the environment but also its reputation to be damaged,” Napier added.

Earlier this year the local Sakhalin community protested over the damage to fisheries caused by Shell’s activities; a complaint recognized by the EBRD, and local residents including the Sakhalin Regional Governor recently protested with banners calling for the EBRD to not fund the project.

In addition, whale experts are still not satisfied by Shell’s proposals to protect the last 100 endangered gray whales from noise, collisions and oil spills. And, Shell has not presented any comprehensive oil spill response plan for winter sea-ice conditions. With construction half-completed and decisions already made, Shell is only now creating its indigenous peoples plan. The timing of this plan is flawed and therefore it does not comply with EBRD policy.

Shell is also not meeting the most basic requirements for reducing impacts of river crossings, such as constructing both oil and gas pipelines simultaneously, as required by its construction permits. The project is subject to ongoing legal battles in local courts, and has already had a judgement against it. EBRD policy states that they should not fund a project that is not in compliance with all regulations.

“It is absurd to be asked to consult on the proposal when it is not complete,” said James Leaton, WWF oil and gas officer. “In an area which is covered by ice for six months of the year an oil spill could be devastating. Traditional methods such as booms would be useless and dispersants can’t be used because of the threat to the critically endangered whales.”

In addition to the whales, WWF believes the Production Sharing Agreement to be a very bad deal for Russia, especially for the people of Sakhalin. This lack of development benefits continues at all levels, with, for example, a specific sustainable development fund being used to construct housing for Sakhalin project workers rather than for local benefits.

“It is indicative of the project that local people struggle to gain access to reliable energy while Shell will be pumping gas away from the island,” continued Leaton. “The money the EBRD would make from this project will not be worth the loss of credibility and the risk of being responsible for the extinction of a species.”


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