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Last Update: December 26, 2007
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International Development Finance Collapses for Controversial Oil and Gas Project by Shell
The US Export Import Bank (Ex-Im Bank) and the UK Export Credit Guarantee Department (ECGD) announced their withdrawal from Sakhalin, a contentious oil and gas project, sponsored by Shell, off the east coast of Russia. Dow Jones reported that Sakhalin Energy's decision to withdraw financing was due to “serious concerns over possible delays” in financing.
Financially, this is yet another blow to the fledgling investment of a company mired by environmental problems and accusation the world over. Despite it's investments and glossy marketing of its Corporate Social Responsibility programs, Shell continues to run into troubles in local communities due to its poor environmental track record. Nigeria, Argentina, Brazil, Philippines, USA, Ireland, Holland, and now Russia, mark for Shell, the growing tendency of local communities to win out over poor corporate compliance with environmental norms and the lack of social and political tolerance for companies that do not do their due diligence to protect the environment and invest more responsibly.
Sakhalin II, the world's largest integrated oil and gas project, located on and off-shore of Sakhalin Island in the Russian Far East, has been plagued by environmental problems, including threats to the critically endangered Western Gray Whales, damage to wild salmon spawning grounds, and negative impacts to indigenous and fishing cultures, says the Doug Norlen of the Pacific Environment, a non profit organization that has been advocating against the Sakhalin project for nearly a decade.
The US Eximbank and the ECGD pullout follow other similar financial institution abandonment of the Sakhalin project, including previous pullouts by regional banks such as the European Bank for Reconstruction and Development which withdrew its support in 2007, citing environmental policy compliance issues.
More Information
Please visit Pacific Environment at www.pacificenvironment.org
