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    Regulator suspends Sakhalin II pipeline over building violations

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    Russia's industrial safety regulator said Thursday it had suspended the construction of a pipeline, part of the giant Sakhalin II oil and gas project in the country's Far East, citing violations.

    YUZHNO-SAKHALINSK (Far East), July 26 (RIA Novosti) - Russia's industrial safety regulator said Thursday it had suspended the construction of a pipeline, part of the giant Sakhalin II oil and gas project in the country's Far East, citing violations.

    "According to findings, the project operator has deviated from design-stipulated requirements on the drainage system at a tectonic fracture for the Sakhalin II project to develop the Piltun-Astokh and Luna fields," said Lidia Vostretsova, chief inspector at the local branch of the Federal Environmental, Engineering, and Nuclear Supervision Agency.

    Vostretsova said the operator was using the wrong kind of pipes and violating pipe-laying procedures. She said construction would be suspended until the operator rectified the violations.

    Commenting on the decision, Sakhalin Energy, the project operator controlled by natural gas monopoly Gazprom, said the changes to the original design were necessary to prevent accidents, including mudflows, as the 800-km (500-mile) pipeline was being laid on complex terrain, with seismic fractures, hills and numerous streams.

    "While building the pipeline in a seismologically hazardous zone near the village of Yasnoye, some technological schemes were improved," a company spokesperson said, adding that independent experts were assessing the improvements.

    The ambitious project, formerly led by Anglo-Dutch oil giant Shell, experienced months of intense pressure last year from Russian authorities, who accused it of causing serious environmental damage to Sakhalin Island, including deforestation, toxic waste dumping and soil erosion.

    The dispute was largely resolved when Russia's Gazprom [RTS: GAZP], which acquired a controlling stake in the project last December, and the authorities coordinated in April 2006 a plan to fix the damage.

    The stakes of the other partners, Royal Dutch Shell, Mitsui and Mitsubishi, halved to 27.5%, 12.5% and 10% respectively, as a result of the deal.

    Sakhalin II has estimated reserves of 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas. The project also comprises an LNG plant, with a capacity of 9.6 million metric tons a year, which is due to be launched in 2008, and an LNG export terminal. Most of the LNG from the project will be exported to Japan.

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