#34 - JRL 2006-257 - JRL Home
Moscow Times
November 15, 2006
Mitvol Tries to Allay Investors' Fears
By Miriam Elder
Staff Writer

Government environmental inspector Oleg Mitvol attempted to allay investors' concerns Tuesday, insisting his investigation into Shell's Sakhalin-2 project was not part of a wider campaign against foreign investment in oil and gas.

Fielding questions at a meeting of the American Chamber of Commerce, Mitvol accused project operator Sakhalin Energy of failing to address purported environmental violations and said he was talking with U.S.-based lawyers about bringing a $15 billion lawsuit against Sakhalin Energy for "compensation and knowingly concealing knowledge of environmental damage."

Foreign investors and diplomats have raised concerns that Sakhalin-2, the country's biggest foreign investment project, is being selectively targeted because it is the only oil and gas venture without a Russian partner.

"Violations, whether they are committed by foreign or Russian companies, should be punished in the same way under the laws of the Russian Federation," Mitvol said at the meeting.

Mitvol cited recent audits of LUKoil and Rosneft as evidence of his unbiased environmental campaign. Analysts have suggested, however, that these investigations are being used to cover up the attack on Shell.

Mitvol said he was also willing to look into any environmental damage caused by Gazprom. "If you have any information about Gazprom, we can arrange within one week an inspection for anyone who wants to administer field audits," he said.

Tax claims and allegations of license violations leveled against TNK-BP have also prompted concern that the state is pressuring the company to make way for a state-friendly Russian partner.

Mitvol said he was gearing up to check TNK-BP's Samotlor field in western Siberia. "We will probably go out there after there is snow cover," Mitvol said on the sidelines of the conference.

Yet, Mitvol's concerns clearly went beyond the environment.

Trashing Sakhalin Energy for allegedly paying its security guards $37,000 per month, Mitvol also accused TNK-BP of seeking profit over field development. "I know certain companies that have no opportunities to develop gas fields but whose shares sell like hot cakes on the London Stock Exchange," Mitvol said.

Natural Resources Minister Yury Trutnev has accused TNK-BP of holding the worst record for field development in the country.

"We have questions about fields regardless of who owns them," Mitvol said. "We no longer view foreigners as a special category and we don't write different laws for them."

Mitvol, who spearheaded the campaign against Shell in early September, has since been sidelined, as Trutnev has taken over the investigation. Last month, police seized documents and receipts from Mitvol's office relating to a September visit to Sakhalin. Mitvol said Tuesday that it appeared the investigation had been dropped, as he had heard nothing from the police since.

His rambunctious style often elicited laughs and sneers from some of the audience, which included executives from Chevron, ConocoPhillips and TNK-BP.

Mitvol slammed Sakhalin Energy for failing to adequately address charges that it caused untold damage to fish, rivers and forests during the project.

Waving a copy of Sakhalin Energy's 1,000-page answer to the ministry's complaints filed last week, Mitvol ran through a detailed list of purported environmental damage.

Failing to elicit a response from the audience, he held up the report and said: "Do you know how much timber it took to create this report?" He appeared surprised at the laughs that followed.

Sakhalin Energy said in a statement after the meeting that it was "disappointed at what appears to be an unsubstantiated attack" on the company.