PLATFORM Unravelling the CarbonWeb
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Unravelling the Carbon Web is a project by PLATFORM. We work to reduce the environmental and social impacts of oil corporations, to help citizens gain a say in decisions that affect them, and to support the transition to a more sustainable energy economy.

Sakhalin II Impacts
A Production 'Non-Sharing' Agreement
Bankrolling Sakhalin II
Campaigning on Sakhalin II

Bankrolling Sakhalin II

With project costs doubling to $20 billion, Shell is unwilling to finance Sakhalin II entirely off its balance sheets. Preferring to share the risks, Shell are seeking to bring private and public banks and export credit agencies on board through project financing.

Credit Suisse are acting as financial advisor to the project and will be responsible for structuring the loan agreement. At least six private banks have bid for lead arranger status - Royal Bank of Scotland (UK), ABN AMRO (Netherlands), BNP Paribas (France), Mizuho (Japan), SMBC (Japan) and Bank of Tokyo-Mitsubishi (Japan). If the banks choose to proceed with project financing, they will each probably provide around $100 million and 'arrange' several hundred million more from other sources. Generally a project of this size would have 2-3 times as many banks bidding to be lead arranger; the low number of bids shows the widespread recognition of Sakhalin II's damaging nature.

The banks have been presented with clear evidence that Sakhalin II design falls significantly short of minimum standards, let alone best practice. Project construction has now progressed to a stage (75% completion) where compliance is impossible. Final decisions are expected from August 2006 onwards.

PLATFORM carried out two analyses of the project against the Equator Principles, a voluntary code on responsible lending adopted by 40 banks, highlighting numerous breaches of the Principles:

Principal Objections and Press Release: Banks warned - stay off whale habitat (May 2004)

Sakhalin II gas and oil project: further breaches of the Equator Principles, May 04 - March 05.

Sakhalin II gas and oil project: further environmental and social risks, May 04 - March 05 (version for non-Equator banks)