In 2003, the Ministry of Natural Resources approved a positive conclusion of the environmental assessment for the integrated development of the Piltun-Astokhskoye and Lunskoye fields within the framework of Sakhalin-2. In August, Rosprirodnadzor decided to study the project again. It conducted a comprehensive inspection of the feasibility study, recommendations issued upon approval of the environmental assessment, and water use licenses. During the inspection, a number of violations were identified, for example, the company discharged water with an excess of the permissible content of oil products from the Molikpak platform. In late August, Deputy Head of Rosprirodnadzor Oleg Mitvol wrote an appeal to the Prosecutor General's Office. The latter, in turn, challenged the order of the Ministry of Natural Resources. "The legal act was issued in violation of the requirements of current legislation," the Prosecutor General's Office said in a statement. "The state environmental assessment was conducted on the basis of insufficiently developed documentation."

And yesterday the Ministry of Natural Resources announced the cancellation of the order from 2003. As the head of the press service of the department Rinat Gizatullin stated, “without an environmental assessment Sakhalin Energy will not be able to operate.” This decision of the Ministry of Natural Resources still needs to be agreed upon with Rostekhnadzor. Sakhalin Energy stated that if it comes into force, it is possible that the company will challenge it in court.

It will take the company about a year to obtain another environmental assessment, notes Troika Dialog analyst Valery Nesterov. The possibility of revoking Sakhalin Energy's subsoil use license is not being considered, says Sergei Fedorov, director of the Ministry of Natural Resources department. However, it is possible that the license for the Kharyaginskoye field, where numerous discrepancies between the work being carried out and the technical project were identified, will be revoked early, he added. Total is not commenting on this.

Yesterday, Rosprirodnadzor completed a scheduled inspection of Sakhalin-1. According to a representative of this agency, the results of the inspection were sent to the project operator, and they will be officially announced in October.

Aton analyst Steven Dashevsky believes that Sakhalin-2 developers should remove the officials’ claims during negotiations, not allowing work at the fields to be stopped. And Valery Nesterov believes that the actions of Rosprirodnadzor and the Ministry of Natural Resources are a political campaign: “Never before has so much attention been paid to environmental protection issues in Russia.” According to the expert, the authorities are seeking the operators’ consent to transfer the PSA to the usual tax regime and to bring Russian partners into Kharyaga and Sakhalin-2.

Sakhalin Energy and Total hope that the PSA regime for their projects will be preserved. ExxonMobil declined to comment. A Shell representative said that the company is not inclined to connect the attacks of Rosprirodnadzor and the Ministry of Natural Resources with the protracted negotiations with Gazprom on the Russian monopoly's entry into Sakhalin-2.

Sakhalin-2 will be stopped