Public Challenges Halt EBRD Financing Review for Sakhalin II Project

In December 2005, the European Bank for Reconstruction and Development began public consultation for Sakhalin II. During the subsequent 120 days, critics challenged the project in London, Moscow, Sakhalin, and Hokkaido over issues including whales, salmon rivers, and seismic risk. Before the financing question could be resolved, Russian regulators moved against a crucial environmental approval, leading the EBRD to state that the resulting legal uncertainty prevented its financing decision.

The situation illustrates how public challenges and regulatory shifts can halt major international investment projects. The EBRD determined that the legal uncertainty surrounding the project prevented it from progressing its financing decision, despite the project being a $20 billion undertaking.