Russian permit revocation draws Sakhalin Energy response

The Russian Natural Resource Ministry's decision to revoke its environmental approval for Sakhalin-2 has drawn a response from Sakhalin Energy.

Offshore staff

SAKHALIN Island -- The Russian Natural Resource Ministry's decision to revoke its environmental approval for Sakhalin-2 has drawn a response from Sakhalin Energy.

The state annulled its approval for the project following complaints from government prosecutors that the state environmental study was based on insufficient documents, and that the project lacked a risk evaluation.

Sakhalin Energy has responded that no applicable law has been violated, that environmental challenges have been met, and that all concerns are being addressed in cooperation with relevant authorities.

The operator also pointed that the approval has been defended successfully in Russian courts as recently as last month.

"It should be noted that none of these developments relate to the existing Phase 1 activities which are not impacted in any way," said Ian Craig, CEO of Sakhalin Energy.

Sakhalin II is the world's largest integrated oil and gas project, and at $20 billion it is the largest direct investment in Russia by foreign companies. The project includes development oif Piltun-Astokhsky and Lunskoye fields off Russia's east coast with estimated reserves of 150 million tons of oil and 500 bcm natural gas.

The Sakhalin Energy consortium is 55% owned by Shell.

9/19/06

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