Environmental groups have applied for a judicial review of official support for Royal Dutch Shell’s Sakhalin 2 oil-and-gas project off the far eastern coast of Russia, arguing that it in effect gave the backing of the UK government to serious environmental damage.
The focus of the criticism by the WWF and The Corner House is a conditional decision by the Export Credit Guarantee Department in March 2004 to offer roughly $1bn (£499m) in guarantees to the Sakhalin 2 project to cover work being done by two British sub-contractors.
That offer was subject to a range of conditions, including that the ECGD needed to be satisfied about the project’s environmental impact.
WWF and Corner House said the conditional decision was unlawful because the government failed to hold a proper consultation or environmental impact assessment.
Nick Hildyard, co-director of Corner House, said the Department of Trade and Industry (now the Department for Business, Enterprise and Regulatory Reform) had broken its own policies by making the provisional decision before having access to all the relevant information.
However, the ECGD last night strongly criticised the WWF, saying its statement “contained material inaccuracies and was misleading”. It said it had not yet offered any guarantee cover to the project, because – more than three years on from its conditional approval – it had still not reached a decision on whether its conditions had been met.
Sakhalin Energy Investment Company, the consortium running the $20bn project, has also rejected charges about the environmental damage it has caused.
Concerns have centred on the western Pacific grey whales, described by the World Conservation Union as a “critically endangered species”, with only about 120 remaining, but SEIC said the project has had no effect on the population.
Shell has a 27.5 per cent stake in SEIC, after being forced to sell half its holding to Gazprom, the Russian state-controlled gas company, at the end of last year.
Judicial reviews have become an increasingly popular tool for campaigners to challenge official decisions, winning high-profile successes such as the High Court ruling in February that the consultation process during a government review of policy on nuclear energy last year had been “very seriously flawed” and “procedurally unfair”.
Dan Tench, a partner at Olswang, the law firm, said the WWF claim reflected the increasingly “hot issue” of “extra-territorial” judicial reviews, in which the impact of the policy being challenged was mostly overseas.