In December 2008 Sakhalin Energy won the Environmental Project of the Year award. The Company’s protection of the Western Gray Whale population was recognised in the Environmental Efficiency of Economics category. The award was presented by Yuri Trutnev, the Russian Federation’s Natural Resources Minister.

Another diploma was awarded to Sakhalin Energy contractor, Starstroi for its implementation of the Sakhalin II onshore pipeline system.

The awards were established in 2008 by the Natural Resources Ministry. The first winners of the award included 46 projects from more than 700 nominations. The winners were recognised for projects implementing the most advanced environmental technology contributing to the mitigation of production-induced environmental impact and the increase of environmental safety at production, industry and community levels.

In his welcome telegram addressed to the winners, the Russian Prime Minister, Vladimir Putin said that the number of companies which were implementing innovations and new environmentally-friendly technology was growing and that their contribution to the development of the Russian economy was steadily increasing.

Sakhalin Energy’s Western Gray Whales protection programme to mitigate any Project impact on these marine mammals, which are a critically endangered species and are included in Russia’s Red Data Book, is ongoing.

The whales’ summer feeding grounds lie close to the Piltun–Astokhskoye field in the Sea of Okhotsk, which is under development by Sakhalin Energy. Together with Exxon Neftegas Limited, the Company carries out extensive monitoring of the Western Gray Whales which involves Russian and international scientists. During the construction of the Piltun-Astokhskoye-B (PA-B) platform and its associated offshore pipelines, Sakhalin Energy took a number of noise control measures to reduce noise levels to approved figures recommended by environmental consultants. According to independent monitoring, the implementation of Sakhalin II has not produced any significant impact on the protected whales.

Presenting the award, Mr. Trutnev noted that a thorough review of each candidate project was a kind of environmental audit. This high evaluation of Sakhalin Energy’s environmental activity supports the Company’s main business principles – reliable, effective, safe and environmentally responsible operation.

December 2008.