MOSCOW, December 13 (RIA Novosti) - Measures by Russian regulators are disrupting work on the vast Sakhalin II oil and gas project in Russia's Far East, the project operator said Wednesday.
Igor Ignatyev, vice president of Shell-controlled Sakhalin Energy, said: "Regulators' actions, which slow down the consideration of documents submitted for coordination, are beginning to affect the project."
The operator of the project has been under scrutiny since September, when the Natural Resources Ministry canceled its 2003 approval of Sakhalin II.
Sakhalin Energy, in which Royal Dutch Shell holds a 55% stake, is accused of causing serious damage to Sakhalin Island's ecology, including deforestation, toxic waste dumping and soil erosion.
Ignatyev said the company has already rectified environmental damage in the Makarov region, on the Okhotsk Sea. He said the company has addressed the environmental watchdog with a request to hold a joint inspection of the area and that it is ready to proceed with the construction of the pipeline.
"We have filed documents for another inspection, and a representative of the Russian Federal Agency for the Oversight of Natural Resources has visited the area, but there are still no decisions from the agency, although we believe that we can already proceed with the work," he said.
Ignatyev added that the agency has already been working for two months on the company's request to start drilling at the Lugansk gas deposit, citing technical reasons. He said that under the project's plan, drilling was scheduled to begin in January 2007, but that the schedule has not been met because the agency has not yet granted permission.
"We do not even have a report on the results of the inspection, and absolutely no written answers to documents we have sent to the Russian Federal Agency for the Oversight of Natural Resources," Ignatyev said.
But Oleg Mitvol, a deputy head of the agency, said commenting on Ignatyev's statement on the Lugansk gas deposit that "the company did not provide a full package of documents."
"The issues there [in the documents] are purely formal, and as soon as we receive a full package of documents we will consider them in line with the legislation," Mitvol said, adding that a request should be considered within a one-month period.
On the whole, Mitvol reacted harshly to Ignatyev statement today that Russian regulators are hindering the project's implementation, and said that the Sakhalin Energy will not resume with construction until it provides Russian oversight bodies with engineering solutions that will guarantee ecological security.
"There will be no construction on Sakhalin until the company provides us with engineering solutions for each of the problem areas," Mitvol said. "For each landslide danger zone and for each of the 529 rivers that the pipeline lies across."
Following months of intense pressure on Shell from Russian authorities, it appears as if state-run energy giant Gazprom is set to gain a large stake in Sakhalin II, after brokering a deal with Royal Dutch Shell.
A spokesman for the Russian energy giant said Monday that Gazprom CEO Alexei Miller had a working meeting with Shell CEO Jeroen van der Veer last week on Friday, at which the Shell chief put forward proposals on Gazprom's participation in the project. The spokesman declined to give details, but said the company was studying the offer.
On Wednesday, Russian Industry and Energy Minister Viktor Khristenko officially confirmed that Gazprom was in talks with Shell on its possible involvement in the project.
"Working consultations and negotiations on Gazprom's possible involvement in the project are in progress," Khristenko told parliament.
The minority owners of Sakhalin Energy are Japan's Mitsui, with 25%, and Mitsubishi, with 20%. Most of the liquefied natural gas from the project will be exported to Japan, which is seeking to diversify its energy imports.
Sakhalin II 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.
