Russian environment agency asks court to halt Sakhalin-2 energy project - Yahoo! News

MOSCOW (AFP) - Russia's state environmental agency said it had launched a legal challenge to work at Sakhalin-2, a massive oil and gas project led by British group Shell, as efforts continued by state-owned Gazprom to obtain a stake in the project.
The Russian agency for environmental use has asked a Moscow court to revoke permits allowing the Shell-led Sakhalin Energy consortium to proceed with its 20-billion-dollar (15.6-billion-euro) energy project, one of Russia's largest.
If the agency wins its suit, "business and other activity within the framework of Sakhalin-2 will be forbidden until new state ecological approvals are received and all violations of environmental law are eliminated," the agency said in a statement.
Sakhalin Energy has been under increasing pressure from Russian environmental authorities in recent months over alleged environmental violations involving pipeline construction, logging and water usage at the far eastern Russian island.
At the end of August, the company halted pipeline construction after the Russian natural resources ministry charged it with environmental violations, but said the project was still on schedule to begin shipping liquefied natural gas (LNG) by mid-2008.
Analysts have said that the environmental agencies' pressure is related directly to a breakdown in talks with state gas monopoly Gazprom, which is seeking a 25-percent stake in Sakhalin-2.
The two companies agreed in 2005 to a swap in which Gazprom would receive 25 percent of Sakhalin-2 in exchange for 50 percent of Gazprom's Zapolyarnoye natural gas field in Siberia.
Just weeks after reaching an agreement, however, Sakhalin Energy revised its cost estimates for Sakhalin-2 up from 10 billion dollars to the current 20 billion, leading Gazprom to call the swap unfair and demand better terms.
The project is currently 55-percent owned by Shell, with the remaining stake split by Japanese companies Mitsui (25 percent) and Mitsubishi (20 percent).
Sakhalin Energy spokesman Ivan Chernyakhovsky declined to comment on the environmental agency's statement on Tuesday.
"We have only recently received the statement and cannot comment on it yet," Chernyakhovsky said.
Igor Shuvalov, a top Kremlin official, suggested that environmental pressure over the Sakhalin project could have a political slant.
"You remember when we prepared the Pacific pipeline what problems we had with civil movements. We came under huge pressure," he said, adding: "Political motives were hiding behind the ecological demands."
He said that in the run-up to Russia's election season, with parliamentary elections in 2007 and a presidential poll in 2008, "my personal feeling is that... the ecological factor will be very signficant. It will be used by those in power and those struggling with those in power."
Shell's troubles come at a time when the Russian government is moving aggressively to increase state control over its natural resources sector, especially oil and gas production.
A report by the ministry of natural resources in May attacked both Shell and ExxonMobil, which runs the Sakhalin-1 oil project, for cost overruns, saying Russian companies should be given majority control of both projects.