Shell's Sakhalin II Project Exposed: Environmental and Safety Issues Revealed

Documents from Royal Dutch Shell Plc reveal that the company's Sakhalin II project in Russia had significant environmental and safety issues. In December 2005, an independent lenders' audit found that two-thirds of 90 matters examined produced negative results concerning compliance with environmental standards.

The audit was conducted by RSK ENSR for the European Bank for Reconstruction and Development (EBRD), which had financed Phase I of the project since 1997. The EBRD's official project record shows an EBRD senior loan of $116 million, accompanied by equal loans from the US Overseas Private Investment Corporation and the Export-Import Bank of Japan.

The lenders' audit criticized the management of oil-spill response equipment, specifically stating that materials used during the response to the Cristoforo Colombo accident had not been replaced. This was a significant issue because it indicated a readiness problem, rather than just an historical criticism of the Kholmsk response.