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Russia may impose serious sanctions on Sakhalin-2 oil and gas project for environmental violations, the national Natural Resources Minister Yuri Trutnev announced Monday.

“If the project operator [Sakhalin Energy] provides a detailed plan to eliminate all the environmental damage, the project will not be frozen. If the company does not take the necessary measures then the Ministry will consider applying sanctions,” Trutnev was quoted by Ria Novosti as saying to reporters on the sidelines of the advisory council on foreign investments.

According to Trutnev, during his upcoming visit to Sakhalin he intends to “see actions implemented by Royal Dutch Shell to change the situation, and then consider further steps.”

Trutnev’s working visit to Sakhalin is scheduled for October 24-26. The minister plans to check the results of the previous inspection conducted by a commission from Russia's ecological monitoring agency.

In mid September, Russia’s Natural Resources Ministry revoked the ecological license of the $20 billion project due to environmental violations. Later that month, Russia's ecological monitoring agency started environmental inspection of Sakhalin’s forestlands and the state of water areas near the oil pipeline.

Trutnev mentioned Shell Company which holds a major share in Sakhalin Energy, started to rectify situation. “I would like to personally see that it is so,” Trutnev said, Ria Novosti reported.

Speaking of the possibility of monetary compensation for environmental damage, Trutnev said his ministry would definitely apply sanctions, but he did not elaborate.

According to deputy head of Russia's ecological monitoring agency Oleg Mitvol, the complete evaluation of ecological damage is expected to be made by the summer 2007, news reports said.

The giant project has been carried out by British-Dutch oil giant Shell owning a 55 percent stake in the consortium, and Japan’s Mitsui and Co and Mitsubishi Corp which have 25 and 20 percent stakes respectively. The Sakhalin-2 fields’ reserves are estimated at 150 million tons of oil and 500 billion cubic meters of natural gas. Within the project, the construction of a natural gas liquefying plant is planned, with an overall output of 9.6 million tons per year.