Project Impacts

Unfortunately, Sakhalin II is also associated with severe social and environmental impacts and risks, namely:

• Eight hundred kilometers of the project's onshore pipelines have created severe erosion that has damaged hundreds of wild salmon rivers and tributaries and threatens future damage from poorly designed crossing of manifold geohazards, including 22 active earthquake fault crossings and landslide-prone areas;

• LNG terminal dredging and the dumping of dredging wastes damaged the fisheries-rich Aniva Bay. Associated construction activities disrupted local fishermen's and fishing companies' activities, adversely affecting the quality and quantity of fish caught, leading fishermen to bring a claim to the Independent Recourse Mechanism of the European Bank for Reconstruction and Development in 2005. After a massive die-off of herring in 1999 at Piltun Bay, independent lab tests conducted by environmental groups showed herring contained pollutants of the kind used in Sakhalin II drilling;

• SEIC has claimed its Sakhalin Indigenous Minority Development Plan (SIMDP) is an example of best practice, yet it was developed only after the project was deep into the construction phase, damage to indigenous peoples' resources had already occurred, and local indigenous people blockaded the project;

• Most jobs created were filled by workers from elsewhere in Russia and foreign countries, and were mostly associated with the construction phase, creating a boom-bust cycle. The huge influx in workers from the outside created high inflation in housing costs that rival those in Moscow. The increase in introduced workers created heavy pressure on community infrastructure, which increased violence and the spread of sexually transmitted diseases;

• The project's offshore platforms and subsea pipelines threaten the critically endangered Western Gray Whale population. SEIC has failed to follow many of the recommendations of the Western Gray Whale Advisory Panel, violating a condition of several public and private lenders;

• All gas is exported while local people burn dirty coal for their energy needs;

• The project poses unacceptable long-term risk of oil spills amidst treacherous weather and ice despite the fact that the oil industry, including SEIC, has no successful experience of responding to oil spills in ice conditions. Meanwhile, SEIC's complete oil spill response plans have been concealed from the public;

• Chronic violations of public and private bank environmental policies contributed to the 2007 withdrawal of the European Bank for Reconstruction and Development and led SEIC to abandon its attempt to receive nearly one billion dollars in public financing from the US Export-Import Bank and UK Export Credit Guarantee Department. However, in 2008, the public Japan Bank for International Cooperation, three private Japanese banks and three European private banks provided an estimated $5 billion in financing for Sakhalin II.

[1] SEIC is comprised of Gazprom, Royal Dutch Shell, Mitsui and Mitsubishi. Sakhalin II was largely designed and built, and continues to be largely managed, by Royal Dutch Shell.