Translations

SAKHALIN : conducting energy development responsibly

4. Environment

Biodiversity and sustainable resource management

Sector Energy / Water

Year 2010

Country Russian Federation

Transmitter

Context

Sakhalin Energy Investment Company Ltd. (Sakhalin Energy) was formed in 1994 to develop the Piltun-Astokhskoye oil field and the Lunskoye gas field in the Sea of Okhotsk offshore Sakhalin Island in the Russian Far East. Sakhalin Energy is a unique partnership drawing upon global oil and liquefied natural gas (LNG) expertise and experience.

As the first offshore oil and gas development and the first LNG project in Russia, the Sakhalin-2 Project is also being implemented under the first production-sharing agreement (PSA) in the Russian Federation. The Company tapped Russian and international experience to find solutions to the most difficult challenges. The Project can serve as a model for similar partnership initiatives to develop energy sources in the Arctic.

Sakhalin believes that oil and gas will be integral to global energy needs for economic development for many decades to come. Their role is to ensure that they extract and deliver oil and gas profitably and in environmentally and socially responsible ways.

Objectives

- To bear in mind the people and environment surrounding their oil and gas operations

APPROACH

The Sakhalin Indigenous Minorities Development Plan (SIMDP): The Company case is included as an example of good practice in the Stakeholder Engagement handbook, issued by the IFC. This involves the protection of health, education, the establishment of ethnic farms and the preservation and development of traditional lifestyle and culture.

Environmental Action Plan and other protection programs:

- Since the implementation of the Environmental Action Plan in 2007, Sakhalin Energy has stabilized and fully reinstated the banks of a spawning river, installed culverts and completed the technical reinstatement of the pipelines Right of Way (RoW) as well as carried out biological reinstatement.

- Western Gray Whales protection programme where a monitoring and mitigation plan include safety buffers around the survey vessel and real-time acoustic and visual monitoring to prevent exposure of whales to damaging doses of noise.

- Sakhalin Energy is involved in regular engagement with the Korsakov community and Sakhalin fisherman to listen to their concerns and develop appropriate environmental conservation measures.

The Company has purchased and received oil spill response (OSR) equipment at a cost of $US12 million for the operation facilities, held different types of training for operational personnel and has approved and activated OSR Plans to ensure a high level of OSR readiness. An OSR Contractor maintains this equipment in constant readiness. Sakhalin Energy’s Oil Export Terminal won the environmental safety award from the Second International Oil Terminal Congress (2009).

CONTRIBUTION TO COMPANY PERFORMANCE

- In 2009 Sakhalin Energy exceeded planned targets for oil cargoes by more than 11% and for LNG deliveries – over 47%.

- Good corporate image and relationship with stakeholders: more than 100 social development projects have been developed and approved by the indigenous people.

Benefits

- In 2009 all Sakhalin Energy operations and facilities were certified as ISO 14001

- Living standards in the Sakhalin region are growing. The island’s internal revenues increased more than ten times between 2002 and 2008, showing that Sakhalin is the most economically dynamic of all the districts in the Russian Far East.