The Sakhalin Saga

(Energy Current Editorial, Houston, 28 January 2009) The Sakhalin saga shows the complex interplay of political, economic and environmental concerns that now shape the global oil and gas industry. Sakhalin II has been the focus of a global campaign involving at least 146 NGOs in 22 countries. In 2003 the European Bank for Reconstruction and Development (EBRD) declared the Environmental Impact Assessment for Phase 2 unfit for purpose and in December 2006 said it was no longer considering funding for Sakhalin II. In autumn 2007 Sakhalin Energy claimed an independent assessment of the Health, Safety, Environmental and Social Action Plan of the project showed a 'high level of compliance' although the NGOs accused them of misrepresenting the report's findings, arguing that in fact it demonstrated 'widespread non- compliance'. In June 2008 Sakhalin Energy announced an agreement on financing with the Japan Bank for International Cooperation and a consortium of international banks, demonstrating the reality that energy security takes priority over concerns about the environment - Japan will be the major recipient of Sakhalin2's energy exports.