September 24, 2004

Mr. Ian Craig
Chief Executive Officer
Mr. Matthew Bateson
General Manager External Affairs
Mr. Masami Naruse
Head of Japan Strategy, External Affairs
Sakhalin Energy Investment Company Ltd.

We would like to inform you of our deep concerns about the meetings Sakhalin Energy Investment Company Ltd (SEIC) is planning to hold in Tokyo and Hokkaido on October 12th and 13th regarding Sakhalin II oil and gas development project (Sakhalin-II).

We have received an invitation says that this is going to be a "third regular explanatory meeting" in Japan regarding Sakhalin-II. It was a surprise for us to hear that because there was no such consensus between SEIC and us that we are holding regular meetings. We have to reaffirm the process and facts in the past between SEIC and us here since one-sided approach by SEIC is unbearable for us which our voice hasn't been heard.

The meetings SEIC held in Japan in the past had serious fundamental flaws such as lack of transparency and accountability. For example,

1. SEIC has refused to hold "consultation" with Japanese Stakeholders.
The environmental and social impacts to Japan, especially Hokkaido has to be taken into account seriously due to its geographical proximity and its environmental connections to Sakhalin. But SEIC hasn't considered Japanese citizens as a stakeholder and there has been no appropriate consultation held in Japan that general citizens could attend.

2. The meetings were exclusive.
>The meeting announcements were given out only to a limited group of people.
>SEIC refused to take minutes of the meetings by recording or video taping.
>SEIC refused to open the meeting to media.

3. The purpose, form and process of the meetings were one sided and unclear.
SEIC has decided every aspect of the meetings without consulting or sharing with people who are related to the project and would attend the meeting in Japan.

4. SEIC refused to incorporate the outcomes of the meeting into the project plans.
SEIC's former General Manager External Affairs clearly stated that SEIC will not consider any changes of the project through the meetings in Japan though he agreed to take mitigation measures. There would be cases that changing the project is the only mitigation to avoid serious impacts. If SEIC wouldn't understand this and the outcomes of the meetings wouldn't be incorporated to solve the issues, then there is no significance to join meetings.

5. SEIC has ignored the letters by Japanese citizens.
We had send three letters "Concerned Japanese Citizen's Demands for Consultation on ESHIA (June 12, 2003)", "Concerned Japanese Citizen's Demands regarding Sakhalin II Oil and Gas Project in Russia (July 10,2003)" and "Re: Planning meetings in September in Tokyo and Sapporo (September 16,2003)" to raise our concerns and request the response from SEIC, but we have not received any responses to the letters from SEIC officially.

6. SEIC gave false information to the fishery people in Japan.
SEIC told the concerned Japanese fishery people at the meeting held in September, 2003 that there was no detailed plans of sediment dumping into Aniva bay. In October, a month after the explanation, SEIC started dumping of dredged sediment without any explanation to those people who have raised the concern.

Under these circumstances, how can we expect to have constructive meeting with SEIC? It was one of the consequences that many Japanese citizens who had involved in the project didn't attend the meeting in April, as you know.

However, SEIC ignored these facts and repeated in the invitation this time again that the participants will be invited by SEIC and there will be no recording or videotaping allowed for taking minutes. Meanwhile, SEIC has posted "Minutes of Multi-Stakeholder Meeting" from the past meetings in Japan on the website without any confirmation of participants. Surprisingly these documents are selective and there is no description of some meetings which we consider really important. How could SEIC insist that SEIC is not posting documents only convenient for SEIC?

We are still considering participating the meeting in October if it's going to be a meaningful, participatory and transparent meeting on the contrary of the previous ones. To achieve that, we recommend you to consider these following conditions and we request your official response to the letter soon.

a) Participants for the meeting.
We recommend SEIC does not limit participants by invitation and open the meeting to Japanese citizens, including fishery people, experts and NGOs who are related to the project. And we recommend SEIC to launch publicity activity for that.

b) Taking Minutes.
We recommend SEIC to permit to take accurate minutes by recording or videotaping to ensure transparency of the meeting, to share the discussion contents to people who are not able to participate and to keep consistency and continuity of dialogue.

c) Open to Media.
We recommend SEIC to open the meetings to media to inform general citizen about the environment and social consideration of the project.

d) Information Disclosure.
We recommend SEIC to provide the project related documents in Japanese, to makes Japanese citizen enable to have discussions with sufficient information. It should be included all the documents related to the concerns and issues raised by Japanese citizens at least such as wildlife, fishery and oil spills response.

e) Reflect meeting result into the project.
We recommend SEIC to incorporate outcomes of the meetings into the project plan. Does SEIC have a will to do so? Will any decision makers of the company attend the meetings? We restate again that it is really important that SEIC will make the meetings constructive and meaningful, that means the outcomes of the meetings will be reflected to the project thoroughly and appropriately.

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