Robert Napier, chief executive of UK’s biggest conservation organisation, WWF, has launched a scathing attack on energy giant Royal Dutch Shell for failing to meet environmental standards on its $20 billion Sakhalin-2 project.
The attack comes at a sensitive time for Shell because the European Bank for Reconstruction and Development assesses tomorrow whether to lend money to the oil and gas scheme, which is essential for Shell’s long-term prospects.
Napier said: ‘I’m surprised and shocked by Shell’s unacceptable management of the project and the negative impact on Sakhalin’s people and environment. WWF sees no progress on Shell’s part to suggest why the EBRD would now take the decision to lend support.’
WWF believes the project risks making endangered whales extinct and threatens other marine life.
EBRD president, Jean Lemierre, will tomorrow hold a board meeting with the bank’s country representatives to sound out whether they believe the project is ‘fit for purpose’.
If Lemierre thinks the project meets the EBRD’s standards, it will start a 120-day consultation to finally decide whether to forward $450 million.
The EBRD’s decision is crucial because other financial institutions will follow its lead. But Sakhalin-2 presents the biggest dilemma for major global banks since they signed up to the Equator Principles that set ethical guidelines that should be met before funds are lent to major projects.
For Shell, a rejection would spell disaster. Costs on Sakhalin have doubled to $20bn and senior figures may be forced to quit if it fails to spread the financial risk by getting banks involved.
Shell said: ‘WWF refuses to acknowledge the progress by Sakhalin Energy to address the environmental and social issues around Sakhalin. We are disappointed by the assertion that the project won’t meet lenders’ policies and standards.’
Source: The Observer