A high-profile loan sought by the business consortium developing the
controversial Sakhalin II oil pipeline in Russia has failed to be
approved by the European Bank for Reconstruction and Development –
though not on social and environmental grounds, as campaigners had
hoped.
The EBRD had been considering the social and environmental impact of
the $20billion (£10.2bn) scheme for more than a year, but finally
decided last month not to approve a $300million loan for largely
technical reasons rather than concerns about damage to local
communities and the environment.
It said it could no longer consider the loan because the recent
acquisition by the state-run Russian company Gazprom of a majority
stake in the Sakhalin Energy Investment Company had altered the
structure of the consortium. The original main shareholders of Sakhalin
Energy were Shell, Mitsui and Mitsubishi.
The EBRD’s deliberations have been closely watched because have been
seen as a major test for the Equator Principles, a framework for
incorporating environmental and social considerations into project
financing to which the Bank is a signatory. As it is, the nature of the
EBRD’s decision gives no lead to other potential lenders to the
project, including the 39 public institutions and private banks that
endorse the Equator Principles.
However, the EBRD claimed its involvement in developing the pipeline
had resulted in new commitments on the treatment of indigenous people
as well as re-routing of pipelines to help the rare western gray whale
that feeds in the surrounding region.
