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    Russian watchdog blasts Sakhalin Energy on environmental issues

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    The deputy head of Russia's environmental watchdog criticized Tuesday the operator of the massive Sakhalin II energy project in the country's Far East, saying it had not been given a license to wreck the local ecology.

    MOSCOW, September 19 (RIA Novosti) - The deputy head of Russia's environmental watchdog criticized Tuesday the operator of the massive Sakhalin II energy project in the country's Far East, saying it had not been given a license to wreck the local ecology.

    "Sakhalin Energy received permission to produce oil and natural gas," Oleg Mitvol said. "Nobody gave it permission to ruin Russia's environment."

    The Ministry of Natural Resources annulled Monday its approval of a 2003 environmental study on Sakhalin II after prosecutors protested the original endorsement.

    The Sakhalin-II project, implemented under the 1994 product sharing agreement, includes an oil field with associated gas, a natural gas field with associated condensate production, a pipeline, a liquefied natural gas plant, and an LNG export terminal. The total reserves of the two fields are 150 million metric tons of oil (1.1 billion barrels) and 500 billion cubic meters of natural gas.

    The revocation means Sakhalin Energy, the project operator, will be unable to execute plans to develop a crucial LNG plant, which will put in jeopardy contracts with Japan, South Korea and the United States on supplies of liquefied natural gas, due to go into effect in 2008.

    On Tuesday, Mitvol also backed an idea proposed by a Greenpeace representative to refer the case against ministry officials, who had given approval for the project, to prosecutors.

    The head of the Russia World Wildlife Fund said an accident would have become inevitable once Sakhalin II pipelines started to be filled.

    An accident "is not likely, it is 100% guaranteed given the way the pipelines are being laid," Igor Chestin said.

    Chestin also said he had studied expert findings on Sakhalin Energy, and claimed the operator had concealed certain conclusions in 2003.

    The Federal Service for the Oversight of Natural Resources began inspecting Sakhalin Energy's alleged violations of environmental legislation and project specifications on July 25. The watchdog said its experts found the company had failed to build anti-erosion facilities, and had registered excessive disposal of industrial wastewater from the Molikpaq offshore production platform. Shell had denied the charges.

    If a court upholds the service's demands, all activity under the Sakhalin II project will be banned until the state ecological probe issues a revised conclusion, and all environmental violations are eliminated.

    Mitvol said work on Sakhalin II should be suspended until specific engineering proposals are in place on each of the pipeline's sections.

    "Until specific engineering solutions are proposed, I do not think work can continue there," Mitvol said, adding that the main challenge facing engineers was to prevent landslides.

    Sakhalin Energy comprises Shell Sakhalin Holding (55%), Mitsui Sakhalin Development (25%) and Mitsubishi-controlled Diamond Gas Sakhalin (20%).

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