The multi-billion dollar project has been accused of inflicting large-scale damage to the ecosystem of Russia's largest island, including illegal deforestation, dumping of toxic waste, and soil erosion. The terms of the product sharing agreement behind the project, which allows Shell to recoup all its expenses before sharing any of its profits with the state, is also hugely unpopular with the Russian government.
Minister Yury Trutnev, currently visiting Sakhalin, said: "There are a lot of questions to the project's leaders, to construction companies, and to our [the ministry's] regional agencies, which, in my view, have failed to perform their oversight duties properly,"
Oil major Royal Dutch Shell, operating the project through Russia-based company Sakhalin Energy, came under the scrutiny of federal environmental authorities in September.
Analysts link the authorities' move with Shell's decision last year to double project costs to $22 billion, thereby putting off the date on which the Russian government will receive its share of the profits.
The Natural Resources Ministry annulled in September a positive assessment of the project that its experts had made in 2003, and launched an inquiry into the oil giant's alleged violations of environmental laws.
The Sakhalin II project comprises an oil field with associated gas, a natural gas field with associated condensate production, a pipeline, a liquefied natural gas plant and an LNG export terminal. The two fields hold reserves totaling 150 million metric tons (1.1 billion bbl) of oil and 500 billion cubic meters of natural gas.
