Wall Street Journal Exposes Big Oil's Real Deal

Transnational Oil and the Call to End the Double Dealing on Sakhalin Island, Russia

4 September 2002

From Pacific Environment: An investigative article on the front page of today’s Wall Street Journal indicates that oil and gas projects off the shore of Sakhalin Island in the Russian Far East have huge potential to be environmental catastrophes. As the Earth Summit in South Africa comes to an end, environmentalists are demanding that oil companies stop cutting corners on these major oil development projects offshore of Russia’s Sakhalin Island.

The projects, which have proven to poison ocean waters with polluting drilling muds, and which leave the icy, treacherous coastal waters around Sakhain vulnerable to a spill as destructive as the Exxon Valdez, may be the nail in the coffin for the endangered Western Pacific Gray Whale. The Whale is listed as critically endangered by the World Conservation Union and has a population of less than 100 individuals. In addition, as the article emphasizes, scientists are saying that the pipeline and refinery projects will damage some of the most productive salmon habitat in the world, threatening one of the world’s few remaining wild salmon fisheries.

“These corporations would never be allowed to use such low, and dangerous, technical standards in the United States,” commented Catriona Glazebrook, Executive Director of the international environmental non-profit organization Pacific Environment. “These American driven corporations are taking advantage of opportunities in Russia to reduce their costs by putting in place harmful practices. Yet the Sakhalin eco-system is just as precious as the Alaska ecosystem, and the people of Russia have the right to the same environmental and health standards as Americans.”

Anger amongst Russian environmentalists, fishermen, indigenous peoples, and residents of Sakhalin has risen since international oil companies started exploring in 1996. Increasingly, Sakhalin citizens are insisting that the oil companies use the best available technologies in drilling and transporting the oil and gas. Their concern is shared by fishermen in Northern Japan, located less than 50 miles south of Sakhalin.

This frustration recently came to a head in early August when Sakhalin Energy Investment Company, operated by Shell, released what they called the “Western Gray Whale Protection Plan.” In an angry letter to Sakhalin Energy, 25 environmental organizations from Russia, South Korea, Japan, and the U.S., accused the company of proposing inadequate measures for whale conservation. The August 15 letter charges Sakhalin Energy with using incomplete scientific data in the plan, ignoring key data, and withholding crucial information from the public. Signatories include Pacific Environment, Sakhalin Environment Watch, Green Korea United, Friends of the Earth-Japan, World Wildlife Fund, International Fund for Animal Welfare, and the Russian Living Seas Coalition.

“The so-called Whale Protection Plan is an empty shell,” said David Gordon, Associate Director of Pacific Environment. “The companies refuse to recognize that they need to change their behavior if this highly endangered whale population is to survive.”

Pacific Environment, as well as the local organization Sakhalin Environment Watch, sent letters of protest today to key U.S. and international financial institutions that are financing the Sakhalin II project, asking them to rescind or withhold support for the project due to the environmental, financial, and social problems. Pacific Environment is asking the U.S. Overseas Private Investment Corporation, the U.S. Export-Import Bank, and the European Bank for Reconstruction and Development to abide by their own regulations, which forbid support for projects that have such a negative impact on the environment and economy.

“Its bad enough that these projects are occurring,” said Doug Norlen, Policy Director of Pacific Environment. “Its beyond the pale that public institutions with environment and development mandates are financing them using taxpayer dollars.”

Dmitry Lisitsyn, chair of Sakhalin Environment Watch, points out the irony in the public relations campaign that Shell presented at the Johannesburg conference on Sustainable Development, which emphasized self-regulation. Roland Kupers, Shell’s Sustainable Development Vice President, was quoted before the conference saying, “On balance it’s better to have business driven by the desire to be transparent…than by a compliance mindset.” Yet, replies Lisitsyn, “This Wall Street Journal article demonstrates that there is no desire for Shell to be transparent. And the impact to eco-systems around the world would be unthinkable if not for compliance measures, enforced by strong regulations.”

Pacific Environment is a non-profit organization that protects the living environment of the Pacific Rim by strengthening democracy, supporting grassroots activism, empowering communities, and redefining international policies. The organization supports over 100 grassroots organizations in Russia, China and Japan with small grants and capacity-building support. Pacific Environment is a member of the “Stop Exxon-Mobil Alliance,” a broad association of rights groups working to influence ExxonMobil’s behavior.

Read the article from the Wall Street Journal.

Visit the Pacific Environment website for more information.