Bank urged not to fund controversial pipeline

The European Bank of Reconstruction and Development should not give the controversial Sakhalin oil and gas project its blessing - and its cash - according to conservation charity the WWF.


The Shell-led project, which will be the largest of its kind, has applied for a loan of around £500 million from the EBRD to help fund the project.

While the cash would be a drop in the ocean when considering the total cost of the project – so far an estimated US$20 billion – the WWF argues it would bring Sakhalin an environmental and social credibility it does not warrant.

A decision on the loan is set to be made next month.

WWF claims the controversial project has already breached a number of the bank’s policies and should therefore be refused the loan.

Sakhalin II has concerned environmentalists since its conception and led to high profile campaigns to highlight the threat it could pose to endangered Pacific grey whales,

The WWF also holds that any belief on the part of potential lenders that they might be able influence the development and reduce its environmental impact at this stage are misguided.

“The project is now over 80 per cent complete, yet Shell is still seeking financing for it,” said a spokesman for the WWF.

“Shell clearly has the money to complete the project without the need for finance. Potential lenders continue to claim they are trying to influence the project.

“Yet they have not been able to resolve many of the problems before construction advanced, and even where issues such as river crossings are well documented, they have not been able to deliver international standards.”

“It is too late for any potential lender to rescue the environmental impacts of this project. If the European Bank for Reconstruction and Development (EBRD) or the UK’s Export Credit Guarantee Department (ECGD) lend money they will be inheriting all the problems of a flawed design and a poor implementation.”

A spokesman for the EBRD told edie the bank has been conducting thorough and intensive environmental assessments and monitoring of the Sakhalin II project.

“Based on the views of our environmental experts, as well as a review of the economic, financial and legal elements of the project, the management of the EBRD will make a decision whether or not to recommend that the board of directors approve financing for the project,” he said.

“The exact timing of such a recommendation, and the amount of financing that would be attached to it have not been disclosed, but it is expected that a decision could be made in the coming weeks.”

Sam Bond

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