EBRD’s Sakhalin decision should be followed by remaining potential funders, say campaigners
The export credit agencies of Japan, the UK and US, and a range of private banks including ABN Amro, Royal Bank of Scotland, Mizuho still remain as potential financiers of up to USD 10 billion support for the Sakhalin II project, now under the overall control of Gazprom, but with operational control thought still to rest with the former consortium leaders Shell.
While EBRD claims its decision was based on changes in the project’s ownership structure, in the end it was also unable to sign off on the project due to its wide-ranging non-compliance both with Russian law and the bank’s own environmental standards. With the project almost complete and thus terminally flawed in various key respects such as onshore pipeline design technology, campaigners say it will now be impossible for other potential lenders to get involved without breaking their own lending guidelines or unless they suddenly watered down those guidelines.Dimitry Lisitysn, who lives on Sakhalin Island and is the head of Sakhalin Environment Watch, said: “Environmental groups agree with EBRD that its value added was decreasing as the project comes closer to completion. We witnessed EBRD’s environmental leverage diminishing last year when the project’s negative impacts on the ground overtook Sakhalin Energy’s rhetoric to the contrary. Sakhalin Environment Watch will continue its active project monitoring and we will use all emerging opportunities to minimise the environmental impact and risks.”Igor Chestin, Director of WWF-Russia, said: “Today the international NGO coalition has sent a letter to Gazprom requesting the commencement of a constructive dialogue that would take into consideration our demands regarding Sakhalin II’s compliance with national legislation and international environmental and social standards. These are the same demands that we asked of Sakhalin Energy under the project’s previous ownership.” The EBRD’s decision on Sakhalin II had been expected for several weeks following the announcement that Gazprom had taken majority control of the project. Yet EBRD’s environmental credibility would have suffered tremendously if it financed Sakhalin II when the host government, national and international environmental groups, and the EBRD’s own Environment Department, had documented broad and fundamental violations of its policies.Petr Hlobil, Campaigns coordinator of CEE Bankwatch Network, said: “The EBRD’s president talks about balancing the bank’s business nose with its environmental and social responsibility. Has it not filtered through to EBRD corridors yet that you can do away with this balancing act by saying NO altogether to the billion dollar profit-making giants in the extractives sector? Five years and countless hours of EBRD staff time have been devoted to trying to sort out such a badly conceived project. It is inconceivable that 20 renewable energy projects would pose the EBRD as many problems as Shell’s nightmare on Sakhalin has.”