#13 - JRL 7301
The Times (UK)
August 25, 2003
Chekov's 'hell' island seeks riches from oil
Russia's fuel reserves offer development promise but threaten environmental
disaster
From Clem Cecil in Sakhalin
SAKHALIN is the epitome of hell, Anton Chekhov wrote to a friend after returning from the island on Russias Pacific coast in the 1890s. Once one of Russias harshest penal colonies and the scene of fierce fighting with the Japanese, Sakhalin has a dark history.
Now its fate is set to change as the largest direct foreign investment project that Russia has seen taps a recently discovered giant oil and gas reserve on its northeast coast and starts an ambitious new phase of the countrys first offshore oil project.
Zhenya, Anatoli and Basili are three local men who have driven several hours from Yuzhno-Sakhalinsk, the capital, in search of a spot to pitch their tent far away from the building works changing the face of the islands southern coast. The beach at Pritorodnoye is enjoying its last season as bulldozers contracted by Sakhalin Energy move in to clear ground for a liquefied natural gas plant.
At Velikan Point, however, the landscape is untouched. Floats bob in the water by the mens camp and Anatoli is busy scrubbing a sieve used for extracting eggs from the pink salmon that he has caught.
Sitting at a makeshift table piled high with sparkling red caviar and thick pieces of bread, Anatoli was damning about the project. Fishing has already got worse since drilling started up north, he said.
Zhenya countered that he was not concerned about the pollution that the project will bring to the island. My father earned $2,000 (£1,260) working for Sakhalin Energy and that is more important. Half of my friends and relatives are out of work.
Their main concern is earthquakes; Sakhalin is riven with fault lines. In 1995 more than 2,000 people were killed in an earthquake in the north of the island.
Now Sakhalin Energy has decided to build two 600km (370-mile) underground pipelines along the length of the island, carrying gas and oil to the ice-free southern port at Pritorodnoye. The pipeline will pass over 24 fault lines, seven of which are active. At the crossing point the pipe will be buried a metre deep and enclosed in polystyrene.
Environmentalists say that this is not enough. Earthquakes will cause leaks in the pipeline and these will reach the salmon spawning grounds in streams and rivers, Natalya Berannikova, of Sakhalin Ecology Watch, said.
Fishing, mainly of salmon, provides 30 per cent of employment on Sakhalin. If spawning grounds are affected, the islanders may be left without fish when Sakhalin Energy packs up and leaves in about 40 years.
The indigenous Nivikha tribe, which fishes lakes inland from the off-shore oil platforms, claim that fish numbers have dropped already.
The Pacific Grey Whale, which feeds on the coast where the off-shore oil platforms have been built, is also in danger. The whales are already on the edge of extinction and last year observers noticed that several were undernourished.
However, Sakhalin Energy, the main shareholder of which is Shell, insists that it is observing Russian ecological standards strictly. You have to seek a balance between the needs of the whales and the environment and the needs of the people of Sakhalin and the Russian Federation, Stephen McVeigh, chief executive of Sakhalin Energy, said.
For Russia, the benefits of the project to which American, British and Japanese investors have committed $30 billion over the next decade should be enormous. It will open up South-East Asia as a new market for oil and gas and, potentially, the West Coast of America. Japan has signed a contract for delivery of 2.3 million tonnes of gas per year and soon Sakhalin could be exporting frozen gas to California from Shells £6 billion liquefied natural gas development on the island.
The reserves are estimated at 17 trillion cubic feet of gas and 1.6 billion barrels of crude oil, of which Shell has a 55 per cent share. The first deliveries are expected in 2007. Foreign employees live in a specially built, fenced-off community, dubbed the American village by local people.
The immediate benefits for Sakhalin have yet to be seen. It is in a state of dilapidation. Most of the roads have no tarmac and fish poaching is rife to subsidise tiny incomes.
On Saturday, the wreck of a helicopter that crashed while carrying the islands Governor and most of his administration was found in forests on the mainland. The death of Igor Farkhutdinov has added a further note of uncertainty to the islands future.
Local people fear that a new Governor will not be strong enough to protect the islands interests from big businesses siphoning funds out of Russia.
Many are hopeful that a new life is about to begin as the oil starts flowing down the island; others fear it will merely be another kind of hell for Sakhalin.
Source of tension
The island of Sakhalin lies off the eastern coast of mainland Russia and is separated from the mainland by the Tatar Strait and from Hokkaido, the northernmost island of Japan, by the Soya Strait
With the Kuril Islands, it forms the Sakhalin region of the Russian Far East, with an estimated population of 673,100 (1995)
The islands population is predominantly Russian, with the indigenous tribe of Gilyaks the largest minority Russia annexed northern Sakhalin in 1853 and southern Sakhalin in 1900, before losing it in the 1905 war with Japan
The island was officially integrated as a part of the Russian Federation during the Second World War, when Japanese holdings were transferred to the Soviet Union and the Japanese population was repatriated. Russian control remains a source of tension
In an effort to attract foreign investment, the islands parliament declared that the region was a free trade zone in 1990 and residents began trading with the Japanese
In 1995 Neftegorsk was levelled by an earthquake that killed 2,000 people
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