Gazprom's Sakhalin-2 Suspends Production for Remainder of 2007
By Lucian Kim
Here we go - another one of those under the radar "environmental" stories you won't hear much about.
We have, AGAIN, the long arm of the "venerated" Royal Dutch Shell at work on the construction of this MONSTROSITY.
http://en.wikipedia.org/wiki/Sakhalin-II
Veeger
Nov. 25 (Bloomberg) -- OAO Gazprom's Sakhalin-2 offshore project won't resume production this year after it was damaged by weather, project operator Sakhalin Energy said.
``Evidently the platform won't be producing any more this year,'' Sakhalin Energy spokesman Ivan Chernyakhovsky said in a Moscow phone interview today.
It isn't possible to estimate how much production will be lost, Chernyakhovsky said, as output at this time of year is ``highly dependent'' on ice conditions.
Sakhalin-2, a $22 billion oil-and-gas development north of Japan, has been dogged by concerns that it would harm fish- spawning grounds and the rare Western Gray Whale. After a campaign by Russian environmental regulators last year, Royal Dutch Shell Plc ceded control of the project to Gazprom, Russia's largest energy company.
Sakhalin Energy earlier today said it had a ``small release'' of oil into the Pacific Ocean after equipment was damaged by the recent severe weather.
``We think the spill is less than 10 liters,'' company spokesman Jim Niven said in a phone interview from Yuzhno- Sakhalinsk, citing preliminary estimates. There is no oil slick, only a thin ``sheen'' of oil on the water surface, he added. Officials were at the scene to prevent a further release of oil and investigate the exact cause, Niven said.
``If it was only 10 liters, they wouldn't have made an announcement about it,'' Dmitry Lisitsyn, a local environmental campaigner, said by phone. Activists will examine satellite photos of the site tomorrow, he said.
Two weeks ago a Russian tanker split in two during a storm in the Kerch Strait, spilling 1,300 tons of oil into the waterway between the Black Sea and the Sea of Azov.
Sakhalin Energy made the statement today for the sake of transparency, Niven said.
Bad weather last week caused the Vityaz offshore facility to be suspended and a floating storage vessel to be disconnected, he said. When workers prepared to reconnect the vessel today, they discovered damage to a buoy that had resulted in a ``small'' oil spill.
Besides Shell, Mitsui & Co. and Mitsubishi Corp. are also minority shareholders.
Now let's look at the wiki entry on our friends over at royaldutchshellplc.com website (NOT the company, if you follow the blog you will know all about THAT), you know the GOOD guys said about THIS little project.
Connection with Shell Sakhalin-II project
Moves by the Russian government in relation to environmental issues concerning the Royal Dutch Shell led Sakhalin-II project in eastern Russia has created an international furore, with representations made to President Putin by Prime Minister Tony Blair and many other heads of government. On 18 October 2006, the Donovan's published an article confirming they had for some time been supplying information to the Russian government relating to Sakhalin II. Information in the form of Shell internal emails and Shell insider comments, posted on Royaldutchshellplc.com, were passed by the Donovan's to Oleg Mitvol, the Deputy Head of Rosprirodnadzor, the Russian Environmental Agency. In November 2006, Oleg Mitvol confirmed in an interview published in This Week in Argus FSU Energy that the evidence on which a prosecution against Sakhalin Energy claiming $10 billion in damages was being mounted, was supplied by John Donovan of royaldutchshellplc.com. Mr Mitvol was quoted as saying: "Who will take Sakhalin Energy to court? I will take them. I have documents proving that the Sakhalin Energy management was aware that the company violated technical standards, but carried on trying to meet project deadlines and refused to stop work. I am confident of winning my case in Stockholm. What documents are these? Where are they from? I have email correspondence between executives in Sakhalin Energy management from 2002. I received these letters from John Donovan, owner of the anti-Shell website www.royaldutchshellplc.com."[6] The Russian energy company Gazprom controlled by the Russian government subsequently obtained a majority holding in the Sakhalin-II project. A further report of the supply of evidence by John Donovan to Mitvol was published on 13 November 2006 by Johnson's Russia List sourced from Interfax.
http://www.sakhalinenergy.com/en/ataglance.asp?p=aag_main&s=3
http://www.themoscowtimes.com/cgi-bin/search?words=Sakhalin-2&x=5&y=12
The url from today's Moscow Times when searched shows up nary a word on the disaster (and this IS a disaster ..)
10 hours and not a word from Russia as this google alert showsBloomberg -
25 (Bloomberg) -- OAO Gazprom's Sakhalin-2 offshore project won't resume production this year after it was damaged by weather, project operator Sakhalin ...
Oil output from Sakhalin-2 suspended for rest of year after severe ...
Dmitry Lisitsyn and the fight for Sakhalin
The politics are complicated, the corporate profiteering is staggering, the people of Sakhalin are secure in their human rights, and the game is not yet over. LISTEN (11 min)
| By Emma Simpson BBC Newsnight |
Hurricane Katrina has focused attention on the need to find new supplies of energy. 
Shell, the British-Dutch oil company, is building one of the world's largest oil and gas developments off Sakhalin island, in the Russian far east.
The big oil giants are all hunting for new reserves, but none more so than Shell after it was forced to downgrade its reserves in a financial scandal last year.
They're now banking on this inhospitable corner of Russia, iced over for much of the year, and prone to earthquakes.
Sakhalin lies 9,900km (6,200 miles) east of Moscow. It's a former Tsarist penal colony, and Soviet military outpost; once off limits to foreigners. 
It also has vast quantities of oil and gas, reserves which most other countries could only dream of. But on Sakhalin, there are growing rumblings of discontent.
Shell, operating here as Sakhalin Energy, is in the midst of a huge construction project.
It is building two new production platforms, two 800km pipelines as well as an enormous liquefied natural gas plant to turn the fuel into liquid so it can be sent by tanker to energy hungry countries like Japan and South Korea.
Endangered species
The project could bring big profits. But wherever there's oil there's usually wildlife. Unfortunately for Sakhalin Energy, they have an endangered species in the middle of their oil and gas field.
We took a boat ride for a rare glimpse of the western gray whale. There are only a hundred or so of them left, and they come here to feed every summer, just seven kilometres from one of Sakhalin Energy's new production platforms. 
These creatures have never had so much attention. Their future safety is one of the main reasons why the European Bank for Reconstruction and Development has yet to agree to continue public financing of the project, a project it has said is not yet fit for purpose.
When we visited this windswept corner, it seemed like there were more scientists than whales - three separate teams were monitoring the mammals' every move.
'Major concession'
From a vantage point high above the sea, James Leaton from the Worldwide Fund for Nature (WWF), told me they wanted Sakhalin Energy to delay construction until more research was done.
"If one extra female dies then the species could be finished. We want Shell to take a precautionary approach - there's no second chance with these whales," Mr Leaton explained.
"I think there are a lot of things on the line [in terms of] Shell's reputation; whether they want the extinction of a species on their record and for any banks that consider financing [the project]. 
"This has huge implications for all project finance as to whether there are any meaningful environmental standards attached to it."
Sakhalin Energy also has a team in a beaten up old trailer, but full of high tech noise monitoring equipment. The company says it has done everything it can to minimise the risk and disruption. But it's still working on one big "what if " - an oil spill under ice.
Sakhalin Energy says it has already made a major concession though - re-routing its pipeline further from the whales.
A price worth paying?
But the controversy isn't confined to offshore. Sakhalin Energy is under fire for not taking enough care to protect the hundreds of streams and rivers which the pipeline route will have to cross.
Salmon is the island's most important fish stock and the fish need clean water to spawn in. We were shown one stream where there was nothing to stop the mud sliding into the water.
It's "bad practice," according to Dmitry Lisitsyn, a former geologist and head of Sakhalin Environment Watch. 
"I'm completely sure that if such a pipeline had been built in Great Britain or America, they would do much better."
Ian Craig, the boss of Sakhalin Energy, admits mistakes have been made: "I'll be the first to admit that we haven't got it right first time everywhere... but there are huge challenges," he said.
"We're trying to introduce international best practice with Russian contractors, although they've been working to Russian standards, they're not used to performing in this way."
I asked Dmitry Lsitsyn surely the development was a price worth paying in the long term?
"It's not our gas deposits anymore. It was sold and provided to Shell, to supply Japanese and Asian markets. As for revenues, we will get nothing," he explained.
Today this business is all about scouring for new sources of fuel - pushing the boundaries, to keep our cars on the road.
Sakhalin Island provides an example of the tensions between extracting the fuel of the future and the price that has to be paid.
see also
What is the Siberia-Pacific Pipeline?
The Siberia-Pacific Pipeline goes by a few names, including VSTO ("Eastern Siberia-Pacific Ocean"), Transneft, and Taishet - Perevoznaya. If built, it would be about 2,565 miles (4,130 kilometers) long and cost more than USD $15 billion. More than three times longer than the Alaska pipeline, it is surrounded by controversy. This is one in a series of pipelines planned to export resources out of the fragile Baikal region to East Asia. Previously, a BP gas pipeline was planned to go south of Lake Baikal (from Kovykta) through the Tunka Valley -- and its National Park -- to China. While this was still in development, a Yukos oil pipeline was planned to go the same route, and was stopped by environmental activists. In 2002, a plan for another pipeline, this one by Transneft and going north of Lake Baikal, failed to pass a state environmental impact assessment because it was too close to the lake; Transneft moved it further north, to a safer distance from the lake, but into a high seismic zone. On New Year's Eve 2005, Russia's government made a new commitment to an oil pipeline to Japan (rather than China). The Japanese Bank for International Cooperation (JBIC) a Japanese export credit agency - has shown interest in backing this pipeline. Now, Transneft claims that it will fund the project itself. Construction of a rail station, possibly to be followed by an oil export terminal, began in the winter of 2004-2005 in pristine Perevoznaya Bay on the Sea of Japan.
When will the Siberia-Pacific Pipeline be built?
Building has already begun, possibly in violation of the law.
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