No such file to load -- config/environment

I’m trying to start my Rails 2.3.5 application on Ubuntu 10.10 in
production with

  • ruby 1.8.7 (2010-04-19 patchlevel 253) [i686-linux], MBARI 0x8770,
    Ruby Enterprise Edition 2010.02
  • nginx/0.7.67
  • passenger 2.2.15

I receive the following error:
no such file to load – /root/rails_apps/test/config/environment
(error page on http://178.79.131.147/)

My nginx.conf is:

user root;
worker_processes 1;

http {

server {
listen 80;
server_name localhost;
passenger_enabled on;

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