Russia: Island to Be Turned into Japan's Energy Hub

Publisher Name: 
The Guardian

It will be the largest energy project in the world,
but ecologists fear that a huge pipeline and three
drilling platforms on and around the Russian island of
Sakhalin, which borders Japan, may spell environmental
disaster. The project is likely to bring a company led
by British and Dutch giant Shell hundreds of billions
of dollars and the Kremlin $49bn (31bn).
Moscow's politicians and oil executives are already
counting down to the project's completion in 2007. But
ecologists are criticising the "foolish" decision to
build the pipeline underground through an active
seismic fault in an area considered by many a rare
marine reserve.

US ecologists Pacific Environment say the platforms,
one of which is already working a few miles offshore
from the crumbling northern town of Nogliki, have
upset fish and whale breeding, and could "spell
extinction for the West Pacific grey whale".

Ecologists also claim local laws have been changed so
that the project owners, Sakhalin Energy International
Consortium, the company registered in Bermuda by Shell
and their Japanese partners for the scheme, can more
easily drill for oil - and also dump building waste
from constructing a new tanker port - in previously
protected areas off the island's shore. The company
deny any such changes were made, saying the areas were
never classified as protected in the first place.

The campaign group Sakhalin Ecological Watch also
fears the pipeline will not withstand the serious
earthquakes that regularly hit Sakhalin. It is worried
that leaks will destroy river and forest wildlife, and
the 1,103 crossings the pipeline makes across the
island's river and stream network will radically
affect salmon breeding grounds.

Sakhalin Energy accepts the sensors on the pipeline
can only measure the loss of 1% of the pipeline's
total output, meaning that up to 1,800 barrels of oil
a day could leak without being noticed. But it adds
that the pipeline was designed to withstand most
tremors, often goes under the rivers, and other
sensors would see the changes caused in and around the
pipeline by such a leak. "We are in business to make
money," said a spokesman, "and a 1,800-barrel-a-day
leak would be a big loss. We would notice it."

Sakhalin Energy's decision to invest $10bn in the
project marked the single biggest foreign investment
in Russian history, and was hailed as a sign that
foreign companies had lost their fear of the so-called
"Red Mafia's" grip on business, and that they finally
felt comfortable putting money into Vladimir Putin's
Russia.

While the Kremlin insists the money will bring jobs to
poverty-stricken Sakhalin, many think the 6% royalty
paid by Sakhalin Energy to Moscow on all revenues also
influenced Moscow's decision.

Sakhalin Energy is not alone: US giant Exxon is
already drilling offshore, and BP is exploring the
coastline for reserves. Foreign investment in the
island may eventually exceed $30bn.

The projects have thrived on the support of the local
administration and Moscow, and will effectively turn
Sakhalin into the energy hub for Japan - if not the
entire region - over the next decade.

But tragedy struck yesterday when the death of the
island's governor, Igor Farkhutdinov, was announced,
after the remains of his crashed helicopter were found
on the neighbouring island of Kamchatka. Elections
will follow, perhaps focusing public opinion on the
governor's pet project.

In Nogliki, the remote northern settlement nearest to
Sakhalin Energy's planned second drilling platform,
public opinion is hardening over how they have yet to
reap real benefits from the multi-billion dollar
energy complex springing up around them. While
Sakhalin Energy is building an airport and improving
some roads in Nogliki, locals say their movements have
been restricted.

The local fishermen are particularly angry. Most are
from a local tribe known as the Nivkhi, a third of the
remaining 3,000 of whom are in Nogliki. They say they
have been banned from their lifeblood - fishing -
because the local government does not want the
platform disturbed by fishing boats. The diet of the
Nivkhi depends upon fish, without which, they say,
they fall ill and their teeth rot. The Nivkhi plan a
protest today during which they say they will fish
without permission.

Pacific Environment claims the fishing ban constitutes
"a form of government-sanctioned discrimination"
against the Nivkhi, a breach of the universal
declaration of human rights.

When the oil and gas has been extracted and briefly
purified at a nearby plant, it will travel 500 miles
south in a pipeline to the southern bay of Korsakov.
Bulldozers are already ripping up the picturesque
beaches of the bay, and have permission to start
building a port from September 5, from where tankers
will ship oil and liquid natural gas to Japan and
beyond.

The big wage packets of foreign oil workers have
flooded into the capital Yuzhno-Sakhalinsk, a town
that was once a tsarist penal colony. But while
entrepreneurs rent hurriedly refurbished flats to
British and American oil executives for $6,000
(3,800) a month, locals are feeling the pinch.

Protests

"What do the oil companies bring us?", said Natalia
Barranikova of Sakhalin Ecological Watch. "Ordinary
people get nothing. House prices have gone up three
times because of the oil people."

An Sakhalin Energy spokesman said: "There is a general
support , maybe support is too strong a word, but in
general [locals] have seen an improvement in
conditions." He said Sakhalin Energy had not changed
any policies because of local protests, but had
"altered the focus of our concerns".

AMP Section Name:Climate Justice Initiative