MOSCOW, July 5 (RIA Novosti) - The European Bank for Reconstruction and Development (EBRD) has not decided on whether or not it will continue to fund the Sakhalin II oil and gas project, a senior EBRD official said Wednesday.
While speaking at an international conference, Russia's Shelf: Business Aspects of Oil and Gas Fields Development, Constantine Demetriou, the EBRD's principal banker, commented on a report that the bank had refused to finance the project's second phase as it was not clear how it affected the environment.
Demetriou said a decision had not been taken and would be taken by the EBRD board of directors after an environmental impact statement had been completed.
Demetriou said the project was in progress: the pipeline's route had been changed, investment was continuing to flow in, and contracts for future oil and natural gas exports were being signed. The oil and gas producers are tackling environmental issues, and financial bodies are trying to evaluate progress in this area, said the EBRD official.
Ensuring that the development of the deposit had a minimal effect on Sakhalin's unique ecosystem, its valuable bio-resources, including gray whales in the Terpeniya Bay in the north of the island, is one of the most important tasks facing both the operators of the project and Russia's authorities.
A Product Sharing Agreement for Sakhalin II was signed on June 22, 1994 and came into force immediately after signing. The parties to the agreement are Russia's central government and the Sakhalin region administration and a consortium of foreign companies: Shell Sakhalin Holding, a Shell affiliate that holds 55% of shares in the project, Mitsui Sakhalin Development of Mitsui, Japan's largest financial and industrial group, which owns a 25% share block, and Diamond Gas Sakhalin with 20% of shares. In 1994, the consortium set up Sakhalin Energy, the company to run the Sakhalin II project.
Two oil and gas fields, at Lunsk and Piltun-Astokh, are to be developed under Sakhalin II on Sakhalin's northeastern shelf. Their recoverable reserves are over 204 million metric tons of oil and condensate, and 616 billion cubic meters of natural gas.