Sakhalin II oil and gas development project

What is this about?

Sakhalin II  concerns the building of offshore oil and gas platforms and the piping of oil & gas to the shore and beyond. WWF and its partners are concerned about the effect of the developments on the critically endangered western gray whale, as well as the risks posed to building such refineries in a zone prone to numerous earthquakes. (What's Sakhalin I?)

What price for endangered gray whales?

Background
Sakhalin II  is a US$10 billion oil and gas development in Far East Russia. The Sakhalin Energy Consortium is led by Shell, with Mitsubishi and Mitsui as the other key shareholders.

The consortium has applied for project finance from the UK Export Credit Guarantee Department, the US Export-Import Bank, and the Japanese Bank for International Co-operation. These banks have now been considering the project since 2003, but have not approved finance.

WWF and its partners have continued to raise issues with the financial institutions. There have also been demonstrations at Credit Suisse First Boston, the advisors to the project.

• WWF's Background Paper on the Proposed Phase II of Sakhalin II (pdf 360kb)

Common demands
A coalition of 50 Russian NGOs, published a set of common demands in January 2003. WWF supports these demands through its Russian office, which implements conservation work in the Sea of Okhotsk region surrounding Sakhalin Island.

Gray Whales
Among the 25 marine mammal species living off-shore of Sakhalin Island are 11 endangered species including the world's most critically endangered gray whale, the Western Pacific Gray Whale.

The Gray Whale is on the endangered species lists of the U.S. and Russia, and has been recognized as critically endangered by the International Union for the Conservation of Nature (IUCN). Recent scientific evidence suggests that less than 100 individuals, and possibly fewer than 20 reproductive females capable of bearing calves remain.

• More on WWF's work with Whales and other cetacean species

Independent Scientific Review Panel (ISRP)
Following continuing criticism of the project, Shell agreed to an independent review, convened by IUCN. The world's whale experts have since reviewed the company's proposals and found Shell's measures to be lacking a sound scientific basis.

The panel has questioned the effective of Shell's mitigation measures and found the overall approach to be far removed from the precautionary methods required. A follow up workshop has left a number of questions outstanding regarding key risks and impacts for the whales such as noise, sediment, oil spills and collisions.

Members of the ISRP have written to Shell's chief executive to urge him not to install the platform until all issues are resolved.

Controversies and flaws
The project mirrors flaws in other recent huge infrastructure projects, with local legislation undermined, and no strategic environmental assessment having been carried out.

The onshore pipeline is located in an area of high seismic activity, only 40 km from the site of the 1995 Neftegorsk earthquake. This region can experience events registering 9 on the Richter Scale (earthquake in 2000).

The pipe will cross over 1000 rivers, including waterways essential for the spawning of endangered salmon. Dredging of the site proposed for the (LNG) plant will produce 1 million tonnes of spoil which Shell intend to dump in Aniva Bay, an essential area for the local fishing industry.

Shell
Shell's advertising campaign "Profits and Principles" is based on the premise that it is not necessary to choose between these two elements.

In this case, Shell has clearly chosen its profits over the principle of responding to concerns about the impacts of its operations on biodiversity. Putting a price on the survival of the endangered gray whale population is not acceptable.