"Sakhalin Energy is treating us like a banana republic," Mitvol said Friday on a helicopter tour to a section of oil and gas pipelines that run like a scar down 800 kilometres (500 miles) of the energy-rich island of Sakhalin.

Russian officials and campaigners say the pipelines break a series of laws by causing erosion, silting up pristine rivers and running illegal access roads through dense forest.

"About 20 percent of the pipeline project is in violation of the law ... Twelve rivers have been completely destroyed," said Igor Chestin, director of the Russia programme for WWF, an international environmental watchdog.

Russian officials are now moving to revoke environmental authorisation granted in 2003 for Sakhalin Energy -- one of the biggest privately funded energy projects in the world.

Executives from Sakhalin Energy, in which Shell holds 55 percent and Japanese firms Matsui and Mitsubishi own the rest, say this would cause massive financial losses and dent Russia's reputation as an energy supplier.

"Although the project has faced significant environmental challenges, the company firmly believes that these have been fully addressed," Sakhalin Energy said in a statement.

Energy analysts believe the environmental violations are a pretext being used by the Russian government to pressure Sakhalin Energy to sell a large stake to state gas monopoly Gazprom.

But that prospect does not bother local campaigners, who have complained for years that energy projects on Sakhalin threaten the reindeer population, salmon stocks and the endangered Western Pacific grey whale.

"It's pleasing that the government is finally taking concrete steps. It doesn't matter if there's a political subtext," said Andrei Kurbatov from Sakhalin Environment Watch.

The pipelines are to connect the vast Sakhalin-2 oil and gas fields being developed by Sakhalin Energy off the northeast corner of this often mist-shrouded island to the southern tip for shipping overseas.

Several countries have criticised the Russian government on this issue, particularly nearby Japan, where utilities have already bought up future deliveries of liquefied natural gas (LNG) set to start in 2008.

Mitvol, a media-savvy official who is deputy head of the Russian environmental agency Rosprirodnadzor said: "The company is very powerful... They've been using political levers both inside and outside Russia."

One executive from the Sakhalin Energy project who has worked in Sakhalin oil and gas for several years said that violations were improbable but that the threat of oil spills was high.

"These companies are working to high environmental standards," said the executive, who declined to be named since he did not have authorisation to speak to a reporter.

But he warned that Sakhalin Energy is woefully unprepared in case of an oil spill on the ice that seals off Sakhalin from the mainland for six months of the year.

The current oil spill response plan "is just not serious," he said.

A copy of the response plan viewed by AFP showed there are no special provisions made for operating on ice and that the boats available in case of emergency are not adequate for the choppy waters of the Sea of Okhotsk.

Pacific Environment, a non-governmental environmental organisation based in the US state of California, says the threat of an oil spill is real because of high seismic activity on Sakhalin.

"Sakhalin Energy has no comprehensive oil spill response plan," Pacific Environment said in a statement that warned of "possibly disastrous results of a large-scale oil spill."

Harm wrought on Sakhalin's fragile ecology would also impact the lives of up to a third of the island's 600,000 inhabitants who depend on fishing as a livelihood, campaigners say.

The route of the underground pipelines is clearly visible from the air, snaking through a patchwork of autumn colours along the coastline and under hundreds of rivers.

All the attention on his pipelines has surprised Yevgeny, a middle-aged employee of Russian contractor Starstroi working on a section close to the town of Nogliki in northeast Sakhalin.

Yevgeny, who declined to give his last name, has been working on the pipelines since 2003 and said it has been technically one of his toughest projects yet.

"We have a plan. We will finish the plan. And then I'm off home."

earlier related report
Russian Islanders Voice Anger At Foreign Energy Majors
Nogliki, Russia (AFP) Oct 1 - The only thing that the rich oil and gas reserves just off the sandy shores of Russia's Sakhalin Island have done for Tatyana Kuklik is spoil her fish. "The fish isn't the same. It smells of oil," said Kuklik, as she cut roe from Siberian salmon on Plastun Spit -- an expanse of far eastern wilderness lined with ramshackle wooden fishermen's huts along the water's edge.

Kuklik is a Nivkh, an ethnic group numbering some 2,000 people that has lived off fishing for hundreds of years on the edge of the tundra on this remote island seven time zones east of Moscow.

Complaints by the Nivkh that massive energy projects are threatening their traditional way of life are part of wider and growing discontent against foreign oil majors among the population of Sakhalin.

"What did we get? Sod all," said Sergei, a local man riding the night train towards the oil town of Okha in the far north of this 1,000-kilometre-long island, travelling from its southern capital Yuzhno-Sakhalinsk.

Locals say that foreign energy firms came promising jobs but actually hire few Russians and, when they do, discriminate against them on a daily basis.

"Why should I get 2,500 dollars for two months' work and an American with exactly the same qualification get 28,000? Do you think that's fair?" said Yura, a young man who works on one of the island's two Western energy projects.

Sakhalin-1 is spearheaded by US oil giant ExxonMobil, while Sakhalin-2 is led by British oil major Shell.

Sakhalin-2 is in a bitter dispute with Russian officials, who accuse it of violating environmental laws to build pipelines through the island.

Sakhalin Energy, the company operating Sakhalin-2, says it respects environmental laws and that out of 17,000 people it employs on Sakhalin some 70 percent are Russian nationals.

The company also says it has spent tens of millions of dollars on upgrading local infrastructure, including schools, hospital and cultural centres.

But some local inhabitants say they have just had enough.

"It would be better if all the foreign companies just left," said one local man working on the Sakhalin Energy project, who declined to be named because he was not authorised to speak to a reporter.

The development of offshore reserves heralded a boom for Sakhalin, which has long depended on Moscow for hand-outs despite its wealth of natural reserves.

Some of that boom is visible in Yuzhno-Sakhalinsk in the form of polished office buildings, a new hotel called Mega Palace and the variety of four-wheel drive vehicles roaming the city's streets.

For many ordinary people, however, who continue to live with the prospect of patchy heating in the winter and power failures, that kind of wealth is not accessible.

"We thought the destruction was finally over. But we've seen no benefits in our village," said Svetlana Mullanurova, a local mother protesting against the closure of a secondary school in Porechye on Sakhalin's eastern shore.

"Petrodollars out of the pockets of the bureaucrats and into the schools!" read one of the placards put up by Mullanurova and other protesters picketing outside the regional administration building in Yuzhno-Sakhalinsk this week.

Disappointment with the oil boom has blended in with general disenchantment linked to economic hardship that followed the collapse of the Soviet Union.

In the Nivkh village of Venskoye, which once had a series of cultural amenities, there is just one family left living in a dilapidated house -- the Muvchiks.

"There were maybe 1,000 people living here. Now there are five," said Lydia Muvchik, 65, who recounted the decline of her village from the start of a Soviet re-settlement programme in the 1960s.

Muvchik, a pensioner, wrote a book of Nivkh folk tales entitled "The Beauty from Viskvo" whose publication in 2004 was financed by BP and Sakhalin Energy.

But she is no happier with her Western benefactors than many of her fellow islanders. She has yet to receive any royalties.

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