sakhalin river crossing reports

Independent review of Sakhalin Energy’s river crossing strategy

The EBRD has decided to publish some of the background material that it used to help formulate a new strategy for laying onshore gas and oil pipelines across nearly 1,000 rivers on Sakhalin Island.

The EBRD has been asked to invest in the Sakhalin II energy project. It and other potential lenders first required the company, Sakhalin Energy, to make changes to its Environmental Impact Assessment. One change of procedure initiated by the EBRD, before it opened a 120-day public consultation in December 2005 on a possible investment in the project, was a new strategy to minimise damage to the environment while crossing waterways used by spawning salmon. This was put together as a result of consultants’ reports on earlier procedures, including the reports below.

This series of reports is by consultants from the University of Birmingham and is released at the request of non-governmental organisations and groups monitoring the evolution of the Sakhalin-II project.

• University of Birmingham review dated 21 October 2005  (1Mb)
• University of Birmingham review dated 15 November 2005  (0.1Mb)
• University of Birmingham review dated 28 November 2005  (0.1Mb)
• University of Birmingham review dated 8 December 2005  (0.1Mb) (revised 13 January 2006)
• AEAT issues tracking table showing resolution of issues raised  (0.1Mb) (covering 21 October and 8 December reviews)

Understanding the disclosed documents and the review process

In September 2005 the EBRD and other potential lenders commissioned the University of Birmingham (UoB) to review the adequacy of Sakhalin Energy Investment Company’s (Sakhalin Energy) River Crossings Strategy Report (RCR). This forms part of the EBRD’s environmental due diligence process in considering financing of the Sakhalin II (Phase 2) Project. The review was commissioned through the EBRD’s independent environmental consultant (AEAT).

Two scientists, whose key expertise lies in the fields of hydrogeomorphology and fluvial ecology, were appointed to carry out the review. The review was undertaken from an impact assessment viewpoint and examined, in principle, the adequacy of baseline data, impact assessment, proposed mitigation measures, residual impact and monitoring.

The review process took place over a period of three months, allowing time to establish an acceptable winter river crossing strategy and monitoring plan at the start of the project’s winter pipeline crossing schedule. It was critical to have this document - with associated mitigation measures and monitoring - completed prior to the onset of the “winter” period. One of the fundamental mitigation measures for crossing the sensitive rivers is to cross during the “winter”, outside of the key spawning and migration periods, when water flow rates are low and when the soil on adjacent banks is frozen thereby reducing potential erosion.

The UoB team reviewed several iterations of the RCR, and Sakhalin Energy responded to each review by revising their report. The UoB also participated in a series of meetings with EBRD, AEAT, and Sakhalin Energy, at which details of the river crossings strategy were discussed and remaining actions were agreed. 

Due to timing constraints, UoB was not able to review the final RCR prepared by Sakhalin Energy. The final review from UoB was of the RCR draft dated 6 December 2005. The UoB draft review of this report was submitted on 8 December 2005. However, the final review report was submitted to lenders on 14 January 2006. In the meantime (i.e. between this draft review and the final review) Sakhalin Energy revised the RCR once again and submitted it as final on 11 December 2005. The final UoB review does not cover this final RCR.

Nevertheless, EBRD worked closely with the other potential lenders and AEAT to ensure that all issues raised by UoB were addressed either in the final RCR or in other loan documentation such as the Health, Safety, Environmental and Social Action Plan (HSESAP).

While not required by our policy or procedures, EBRD has, based on several requests, decided along with Sakhalin Energy, to release the UoB reviews of the RCR. In addition, the Bank has released an issues tracking table that was used to ensure that issues raised by UoB were addressed in the RCR or other loan documentation. 

One of the key elements of the strategy presented in the RCR is Sakhalin Energy’s commitment to apply water management control methods for sensitive rivers, wherever feasible to do so. In this regard, the EBRD is pleased with the recent endorsement by the Russian authorities of the conditional use of flume pipes as part of water management control. The Bank remains strongly of the view that this conveys a significant reduction of potential environmental harm and in doing so meets good international practice. This view is supported by monitoring data - turbidity and total suspended sediments - collected during the river crossings completed to date.

Given the importance which the EBRD places on protection of the sensitive riverine habitats, and our previous concerns regarding contractor performance, we have commissioned independent observers to continuously monitor contractor performance in meeting the commitments set out in the RCR, and this arrangement will remain in place during all winter river crossing activities. To date, the EBRD is pleased to observe a significant improvement in contractor control and appreciation of environmental sensitivities associated with the river crossings, and it looks forward to observing ongoing and continuing improvement. One of the main observations made to date is that Sakhalin Energy has the ability to delay the start of work until the contractor has all environmental protection measures and equipment in place for any given crossing.

The EBRD - with support from Sakhalin Energy - has decided to release the UoB reviews of the RCR. In addition, the Bank has released our issue tracking tables showing where the various issues raised by UoB have been addressed. The EBRD believes this will assist the reader in review of these documents, especially due to the fact that UoB did not review the final RCR.

The EBRD welcomes comments on these documents. These can be set out in writing to the Bank at the address given above, or offered in writing or verbally at any of the public stakeholder meetings, which are being undertaken as part of the consideration to finance the Sakhalin II (Phase 2) project between February and April 2006.

Note: There are several items that are not included in the RCR but which are included in other Sakhalin Energy documents. The UoB review was limited to the RCR, and therefore these items are outside the scope of their review. Such items include commitments to monitoring and auditing/inspection and resolution of identified non-compliance items. These items are covered in the Health, Safety, Environmental and Social Action Plan (HSESAP) and would be contractual requirements under a loan agreement. These commitments are available at http://www.sakhalinenergy.com/documents/doc_HSE_Lender_docs.asp.