The Sakhalin-1 project develops three oil and gas fields offshore in the northeastern coast of Sakhalin Island in Russia and is operated by Exxon Neftegas Limited. Discovered in 1977, the production sharing agreement for the project became effective in the late 1990s and the exploration period has formally ended in 2001. Its sister project, the Sakhalin-2 project, also includes three offshore oil and gas platforms, 15 kilometres off the Russian island of Sakhalin, in the North Pacific Ocean, located just north of Japan, off the east coast of Russia. After a long period of funding issues and after the budget had doubled from 10 billion USD to 20 billion USD in 2005, the LNG plant is operational and has now reached full capacity. It is one of the largest integrated oil and gas projects in the world.
Concerns have long been raised about the environmental impact of the projects. The offshore projects are believed to put in danger the Western gray whales, a species already near extinction, which feeds in the waters around Sakhalin. Also, pipelines crossing seismic fault lines, rivers and streams as well as completed and ongoing deforestation for road construction have been identified as potential high risks for the local population and especially for the environment and wildlife.
In 2004, environmentalist organizations were outraged after an oil spill of approximately 1,300 barrels of fuel took place on 8 September at Kholmsk on Sakhalin Island, in an area administrated by Royal Dutch Shell. This event further fuelled criticism and encouraged protests by local, national and international organizations, asking for a moratorium on the Sakhalin marine activities.
The indigenous peoples living on the island, the Nivkh, Uilta and Evenki, pursue a traditional self-sustained lifestyle and economy, living off fishing, hunting, herding and wild plant gathering. They have been suffering from the negative ecological impacts of the oil and gas projects and have been raising awareness about the environmental impacts of the two Sakhalin projects since constructions started in the late 1990s. They have inter alia documented massive herring die-offs, damages to the fishing economy, decreases of saffron cod and they are fearing damage to salmon spawning streams as well as threats to the endangered Western Pacific Grey Whale by the Sakhalin-2 activity.
On 20 January 2005, the indigenous peoples asked the companies to sign a memorandum which would spell out cooperation on an independent cultural impact review and provide for the establishment of a compensation fund. When the companies refused to sign the document, more protests took place and direct action was taken, which included the blockage of roads and other forms of protest. In 2005, representatives of indigenous peoples blocked more than 100 pieces of heavy machinery to protest the oil and gas projects on Sakhalin. Protests continued throughout the year and in January 2006, over 300 protesters blocked the Sakhalin Energy LNG plant, which is part of the Sakhalin-2 project. Throughout the process, indigenous peoples have shared their concern that government and administration were using intimidation techniques in order to stop people from taking part in the protests.
A large part of the protest campaign of local indigenous communities and international NGOs also consisted in efforts of dissuading the European Bank for Reconstruction and Development (EBRD) of investing in the Sakhalin-2 project while it was still considering to do so.
After years of seesaw, the EBRD finally concluded its discussions and decided not to invest in the Royal Dutch Shell operated Sakhalin-2 project in 2011, after the Russian Gazprom agreed to become a majority owner. This development was welcomed by environmentalists, who have been and still are criticizing the Dutch company's management of the oil and gas project and its risks for the environment and indigenous peoples.
In 2005, after pressure from the media and international campaigns by NGOs such as WWF, Greenpeace and local indigenous organizations, Shell accepted the recommendations of an Independent Scientific Review Panel set up by the International Union for Conservation of Nature (IUCN) to re-route the offshore pipelines in order to avoid whale-feeding areas. Hence, the Panel has also found Shell's measures to be lacking a solid scientific basis. Moreover, in 2006, the Western Gray Whales Advisory Panel was established together by the IUCN and Shell in order to enhance the western gray whales' protection.