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Letter to SEIC:"Concerned Japanese Citizens' Demands regarding Sakhalin-2 Oil and Gas Project in Russia"

July 10, 2003

Mr. Stephen H. McVeigh
Chief Executive Officer
Sakhalin Energy Investment Company Ltd.

Concerned Japanese Citizens'

Demands regarding Sakhalin-2 Oil and Gas Project in Russia

Sakhalin-2 oil and gas development project (Sakhalin-2) is presently proceeding without taking necessary to resolve various environmental and social issues as we will state in the following sections. In addition to the consequences that could be imposed to the fishery and environment within the Sakhalin island, the impacts to Japan, especially Hokkaido, need to be taken into account due to its geographical proximity and its environmental connections to Sakhalin.

Sakhalin-2 is supported by investments from Japanese enterprises (Mitsui and Mitsubishi) and loans from the Japanese government through Japan Bank for International Cooperation (JBIC) as well as European Bank for Reconstruction and Development (EBRD). In addition, Japan is one of the biggest buyers of the liquid natural gas (LNG) that will be produced by the project. Despite such large Japanese involvement to Sakhalin-2, SEIC has demonstrated little accountability to the Japanese citizens, and has hardly created opportunities for citizens to comment on the projects.

Information Disclosure and Consultations for Citizens

Japanese citizens, fishermen, specialists, civil organizations, and NGOs who are concerned about Sakhalin-2 have held unofficial meetings on the project with SEIC in December 2002 and April 2003. However, participants were not satisfied with the results. This is because meeting announcements were given out only to a limited group of people, and little information was provided beforehand. As a result, the meetings failed to be the consultations that could generate concrete solutions and improvement measures to the problems. While preparations for Phase-2 are now rapidly in progress, official consultations in Japan have not yet been conducted. We, the Japanese citizens, are greatly concerned about this situation.

 Furthermore, Environment Social Health Impact Assessment (ESHIA) does not regard the communities of Hokkaido as a stakeholder, while the Public Consultation and Disclosure Plan of SEIC does. We believe that revisions must be made in such way that all local communities along the Sea of Okhotsk and the Sea of Japan will be included as stakeholders.

We ask for your awareness of the following tangible concerns raised from Japanese citizens. In addition, we demand adequate information disclosure and a participatory decision-making process that assures Japanese citizens' involvements.

Response to Oil Spills

The Oil Spill Response Plan (OSRP), created by SEIC in September 2002, only covers the responses to the accidents occurred at SEIC's offshore drilling platforms and oil export terminals, and excludes any tanker accidents. Moreover, we learned the SEIC's assumption based on its oil spill simulations, which says that oil can be contained within three days and there will be no harm to Japan. However, this information cannot be verified because SEIC has been refusing to disclose the conditions of the simulations. Citizens and specialists are unsatisfied with the conclusion drawn from the simulation, and the concern over the consequences that Japan might get still remains. We believe it is imperative that SEIC make the conditions of the simulations available to the public immediately.

In addition, in cases of large-scale oil spill accidents occur during crude oil transportations, it is very likely that Japanese coastal area will be polluted. The more frequent the tanker transportations will be, the higher risks Japan need to assume for possible accidents. It is hard to believe that the SEIC does not take sufficient measures to prevent or respond to tanker accidents.

As for oil dispersants, OSRP recommends its use from the first stage of oil spill accidents at the drilling platforms in northeast Sakhalin. The plan notes that the use of dispersants will decrease the amount of oils that could reach biologically rich and vulnerable area, such as saline marshes. However, it could rather have damaging effects to the ecosystems in such area. The use of dispersants must be discussed with careful considerations, especially when it could have grave impacts over fishery.

The Japanese-version of OSRP does not contain full text of its original but is only 30-pages long. In addition, it does not refer to issues that could deeply affect the Japanese fishery, such as the use of dispersants. We believe the entire OSRP should be translated into Japanese immediately, and based on this full translation, consultations should be held with Japanese fishermen and specialists.

Impacts on Hokkaido and its fishery

In the Hokkaido's economy, fishery has always played an important role. Based on Statistical Yearbook of Agriculture, Forestry and Fishery, the production of coastal fishery in Hokkaido for the year 2001 was 0.6 million tons (38.3% of the nation's total fishery production) which valued at 139.8 billion yens (25.7% of the nation's total fishery value). Fishery strongly depends on nature's reproductive capability, and local fishing communities have high anxiety over the Sakhalin development, because of the possibility of oil spills. Once it occurs near Hokkaido, it will surely damage the economy. It could be worse if it occurs in winter, because clean up is even more difficult with drift ice. Nevertheless, SEIC claims that tanker accidents are beyond their responsibilities and ignores to take sufficient prevention or response measures.

Furthermore, it is impermissible to the fishery community that the project operators are using environmentally destructive development methods, such as ocean discharge of drilling mud, of which harms over the environment will surface after a while. We request that SEIC assume its accountability and responsibility to disclose information of the projects to the citizens of Hokkaido who will be directly affected by them.

Impacts on Steller's Sea Eagles

The coastal area facing the Sea of Okhotsk is the important breeding ground of the Steller's sea eagles, which are currently on the verge of extinction. Breeding area also spreads along the northeast shore of Sakhalin where Sakhalin-2 is in progress and more plans are forthcoming.

Wildlife Preservation Bureau of Hokkaido Corp., in cooperation with Moscow State University, has been researching general behaviors and breeding situations of the Steller's sea eagles in the region. So far, approximately 80 pairs of the species and more than 200 nests were identified. With non-breeding eagles, there are more than 250 Steller's sea eagles inhabit along the gulf coast at the very least, especially in the summer time. The eagles, particularly in the breeding season, feed on fish in the gulfs and rivers. It is obvious that environmental destructions from the development or oil spills will have tremendous impacts on the survival of the species.

However, the Environmental Impact Assessment (EIA), which SEIC have compiled in September 2002, hardly mention the impacts on Steller's sea eagles. Moreover, the information in the EIA loses its credibility when it states that "5 pairs were found in the Chaivo Gulf, and another 5 pairs in the Piltun Gulf," whereas the survey conducted by the Wildlife Preservation Bureau of Hokkaido Corp. and Moscow State University have identified approximately 30 pairs and at least ten-odd pairs, respectively. The Chaivo Gulf is, by the way, predicted to get most serious impacts from the development. Furthermore, the assessment regards only "noise" as the development's greatest impact to the eagles. Neither does it make any references to the destruction of breeding and feeding habitat from the development activities in general, nor to the disturbances of breeding from the traffic and people. It does not mention possible damages that oil spills can impose to their feeding areas and juvenile and immature eagles either. Most of the Steller's sea eagles bred in northeast portion of Sakhalin travel to Hokkaido in winter. They are one of the protected species designated by the Japan-Russia Migratory Birds Treaty, for which the intergovernmental consultations will be resumed by the end of 2003. We demand SEIC take responsible measures for the protection of this species.

Note: The Steller's sea eagles are also designated as a protected species by the Cultural Properties Protection Act, and as an endangered species of wild fauna and flora by the Law for the Conservation of Endangered Species of Wild Flora and Fauna in Japan. In addition, they are identified as an endangered species by both the Japanese and Russian Red Lists. It is also a rare species designated by the Japan-Russia Migratory Birds Treaty that requires protection of the species through bilateral cooperation.

Impacts on Western Pacific Gray Whales

The project sites of Sakhalin-1 and Sakhalin-2 are located in the important feeding area of western pacific gray whales, which are also known as "Okhotsk-Korean gray whales" or "western gray whales." It is estimated that the existing number of these particular gray whales is less than a hundred, and the number of mature whales that are capable of breeding is about 40. These gray whales are categorized by the IUCN (The World Conservation Union) as "endangered", which is the highest category for the danger of extinction. They are one of the most threatened large whale species in the world, and also identified as "endangered" by the Russian government, the Mammalogical Society of Japan, and the Fisheries Agency of Japan (Ministry of Agriculture, Forestry and Fisheries of Japan).

From summer to fall, gray whales live in the northern sea and feed on benthic invertebrates. To feed, the whale scoops up its invertebrate prey along with mud, then strains the sediment through the baleen, which permits only the food to remain in the mouth to be swallowed. The gulf of Piltun is their only known feeding area, and a research has found that the seabed in that area is extremely rich in invertebrates. The fact suggests that the protection of this area is essential for the protection of western gray whales. In addition, some reports say that gray whales disappeared from the feeding area during seismic testing conducted there, but returned soon after the testing had ceased. It seems that gray whales are highly sensitive to noises and vibrations. Oil spills will also have severe negative impacts to the species, because they are marine mammals that come to the sea surface to breathe.

We ask SEIC to take extra care for the protection of western pacific gray whales, which are the most endangered whales in waters near Japan. We also demand that SEIC alter development methods as necessary.

Active Faults and Pipeline Construction

There are usually many active faults, which cause earthquakes, lie near the stratum of the oil mining areas in general. Sakhalin also holds many active faults, and in 1995, an earthquake of Magnitude 7.6 occurred and killed more than two thousand people and damaged many facilities. To construct oil pipelines in areas where earthquakes can hit and cause surface slip by one to two meters, thorough research on faults must be done, and technical considerations need to be paid in selecting safe areas for construction or building pipelines across the active faults.

The damages from an earthquake will be enormous with oil spills from the pipelines to the rivers that are extremely important for vegetation and fishery resources. It is imperative to conduct appropriate researches on active faults and methods of pipeline constructions in the area, and to take necessary and adequate measures.

For more information, contact:
Naomi Kanzaki
Friends of the Earth Japan
3-17-24-2F Mejiro, Toshima-ku, Tokyo 171-0031
TEL: +81-3-3951-1081 FAX:+81-3-3951-1084

Friends of the Earth Japan
NPO Okhotsk Platform
Shintaro GOTO, Rissho University
Nobuhiro SAWANO Seiryo Women's Junior College
Keisuke SAITO, Wildlife Preservation bureau of Hokkaido Corp.
Yukiko WATANABE, Wildlife Preservation Bureau of Hokkaido Corp.
Naoko FUNAHASHI, International Fund for Animal Welfare
Tomio YOSHIDA, Hokkaido Educational Federation of Fisheries Cooperative Associations
Yoshio KITAMURA, Abashiri Fisheries Cooperative Union
Kunihisa SAO, Ocean Engineering Research, Inc.
Kazuko SAO, Ocean Engineering Research, Inc.

Mr.Kyosuke Shinozawa, Japan Bank for International Corporation
Mr.Kazauhiko Amakawa, Japan Bank for International Corporation
Mr.Susumu Fujimoto, European Bank for Reconstruction and Development
Mr.Alister Clark, European Bank for Reconstruction and Development
Ms.Naoko Ishii, Ministry of Finance
Mr.Masahiro Kan, Ministry of Finance
(c) 2002 FoE Japan.  All RIghts Reserved.

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