Russia's environmental watchdog said last month that project operator Sakhalin Energy, controlled by Royal Dutch Shell, is in breach of Russia's environmental regulations, and asked the agency overseeing the use of water resources to consider stripping it of 19 licenses.
"There is sufficient evidence to open a criminal case," Prosecutor General Yury Chaika said.
The Federal Service for the Oversight of Natural Resources said it will present a final report on the Sakhalin II project by mid-December, and added that its expert group had identified a number of serious violations, some of which fall under the provisions of Russia's Criminal Code.
The Natural Resources Ministry said earlier it was dissatisfied with the environmental measures taken so far by Sakhalin Energy.
The multibillion-dollar project has been accused of inflicting large-scale ecological damage on Sakhalin Island, including deforestation, toxic waste dumping, and soil erosion.
A probe launched into the project operator's activities uncovered numerous violations of conditions set out in the feasibility study for Sakhalin II, including the illegal routing of an oil pipeline through the territory of a national conservation area and environmental damage on the island's Aniva Bay.
The ministry said the operator acknowledged that the island's 529 rivers needed to recover following work by contractors.
It also quoted media reports that the company "concealed information on serious threats to the island's ecology during the project's development."
Oil major Shell holds a controlling 55% stake in the Sakhalin II deposits. Japan's Mitsui and Mitsubishi own 25% and 20%, respectively.
On September 18, the Natural Resources Ministry annulled its own 2003 Sakhalin Environmental Expert Review (SEER), which gave the project a positive evaluation, following action by prosecutors.
As well as the environmental issue, the production-sharing agreement behind Sakhalin II, which allows Shell to comfortably recoup all its expenses before sharing any of its profits with the state, is hugely unpopular with the Russian government.
The Sakhalin II project comprises 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 two fields hold reserves totaling 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas.
