Vremya MN 30 August 2000 [translation for personal use only] Article by Marina Sokolovskaya: "After Us, the Deluge" The oil companies are destroying Russian nature The 1st International Practical Conference, SRP-2000 (agreement on developing Russian oil and gas deposits with the participation of foreign investors who receive their share of the extracted products) is to take place at the beginning of September in Yuzhno-Sakhalinsk. Vladimir Putin and Bill Richardson, U.S. Secretary of Energy, are expected to attend. Much has been said in the last few years about the fact that the SRP [production-sharing agreement] mechanism is not developed in Russia, and foreign companies therefore do not want to work in our country. The country is losing billions of dollars as a result. But the developments of new oil and gas deposits and the increase in the volumes of oil transport by sea may turn out to have unforeseen ecological consequences for Russia. There are four principal projects today -- they are already extracting oil on the Sakhalin shelf and transporting it through the Sea of Okhotsk to Japan and the United States. Next on the list is the development of deposits in the Barents and Karsk seas. Great hopes are linked with the export of oil supplied by the Caspian Pipeline Consortium (KTK) through the Black Sea, and by the Baltic Pipeline System, correspondingly through the Baltic. The plans are to transport 30-60 million tonnes of oil a year along Russia's Black, Okhotsk and North seas. In the euphoria of big money expectations, however, an extremely important circumstance is being overlooked. Not a single country is insured against oil spills, even in planned operations. Neither the level of personnel training nor the newest technology provide full guarantees. It is even calculated that 0.02 to 0.03 percent of the oil transported in the world yearly ends up in the sea during extraction and transport. This is not counting major accidents. For example, 30,000 tonnes of oil were spilled on the shore of France last year as the result of an accident to the tanker Erik. And 40,000 tonnes, in the catastrophe of the American tanker, Exxon Valdiz, in Alaska in 1989. The damage that time was $5 billion. In striving to secure themselves to the maximum, many Western countries have passed laws in which all procedures connected with the extraction and transport of oil are prescribed in detail. Russia has no such laws. A Love for Bankruptcies The extraction of oil in accordance with the Sakhalin-2 project began last summer on the Northeastern shelf of Sakhalin. The Sakhalin Energy Investment Company Limited (SEIK) was the operator of the project. We cannot help but say a few words about the prehistory of the development of this deposit. In 1992, a government commission chaired by Vladimir Danilov-Danilyan summed up the results of the announced competition of proposals of foreign firms to develop the oil and gas resources of the Sakhalin shelf. Leading world companies took part in the tender, including Shell and Exxon. But the winner of the competition was a consortium consisting of the MacDermott, Mitsui and Marathon Oil corporations (MMM). The government commission gave as the reasoning for its choice the fact that the consortium "has most completely fulfilled the requirements of the Russian side, has experience in developing deposits under Arctic conditions and possesses sufficient financial potentials to put the project into effect." It is surprising that the company's financial condition did not put the members of the commission on guard. At the moment of completing this "successful transaction," MacDermott had losses of $400 million, and Marathon -- of $70 million. MacDermott has been going to ruin for several years. Marathon is leaving the project right behind it. But joining in as a partner there appears, not even a "daughter," but a "granddaughter" company -- Shell-SEIK, registered in the Bahamas by three British nationals. Its charter capital is $100 million. Economical Foreigners One of the most important conditions of the Sakhalin-2 tender that was won was, as entered in the decision of the commission, the "satisfaction of the needs of Russia's Far Eastern region for gas and oil." Supplies of gas on the domestic market were to have begun in 1995. But SEIK is retracting its promises to build a reliable ecological security system, and is beginning to extract oil. According to Vitaliy Gorokhov, corresponding member of the RAYeN [Russian Academy of Natural Sciences] and expert of the Ekoyuris Institute of Ecological-Legal problems, the company was completing its building and equipping at the same time that the fish were spawning. Some 523,000 cubic meters of earth were moved when the Molikpak platform was installed. The materials of the state ecological expert appraisal indicated that this could harm or disturb the migratory route of salmon. SEIK, however, was little worried about the fate of the salmon. All the ecologists' reprimands were ignored. The next ecological problem was the dumping of drilling liquids, interstitial waters and drill cuttings (sludge) into the sea. In accordance with world technology, these burials are carried out at special refuse sites. But this would have required substantial expenditures from the developers or the deposits. SEIK and ENL decided to economize. Knowing that Russian water legislation prohibits dumping waters of this sort into the sea, they lobbied for their interests as much as they could. And they got their way. In the summer of last year, Sergey Stepashin, who was at that time chairman of the government, signed an order which permitted wastes to be dumped into all the seas of the Far East. In so doing, he failed to take into consideration the fact that it is in the Sea of Okhotsk that 65 percent of the Russian sea products are caught. It was then that public ecology organizations complained to the Supreme Court, which recognized the order as illegal. The total extraction of oil for the Sakhalin-1 and Sakhalin-2 projects should be 30 million tonnes. The plans are for the oil to go along pipelines to the south of the peninsula, to the Prigorodnoye settlement. Moreover, they intend to lay the company's oil pipeline through spawning rivers, earthquake-prone sections and forests. According to Vitaliy Gorokhov, projects of this sort are in operation in the world, for example, in Alaska. But there the companies are supplied with legislation within a strict framework and are forced to protect nature to the maximum. The pipelines are therefore removed from the ground and installed on special supports in earthquake-prone places, places where fish spawn and even where deer roam. Naturally, this sort of pipeline installation is extremely expensive. Sakhalinrybvoda has repeatedly stated that the route would cross 463 streams and 65 very important salmon rivers, which provide up to 73 percent of the humpback salmon. And in 1993, the State Ecological Expert Appraisal evaluated the Sakhalin-2 project and gave the decision that "developing oil and gas deposits on the Sakhalin shelf, with a surface pipeline laid to the south of the island, was fraught with irreversible consequences for the fish industry, which is a priority sector in the oblast's economy.... Not enough attention was paid to the methods and periods of the pipelines' passing through numerous rivers and to a guarantee that the spawning grounds and the purity of the water would be preserved." This had no effect on the foreigners, however. The plans to build the pipeline may soon begin to be realized. A Cabal Agreement It is, essentially, extremely difficult to stop the damage being done by Western entrepreneurs. First of all, because there is powerful support within the country for the activity of the oil companies. The State Ecological Expert Appraisal gave a negative decision on the Sakhalin-1 project. According to Russian legislation, the work was to be discontinued. But it goes on as if nothing had happened. Moreover, the Russian government concurred with a cabal agreement in accordance with which all the debatable questions (including ecological) are removed from Russian jurisprudence. The agreements will be interpreted in accordance with English law (the Sakhalin-1 project) and in accordance with the legislation of the state of New York (Sakhalin-2). In the opinion of Vitaliy Gorokhov, with the appearance of the arbitration investigation, the Russian side is virtually doomed to lose the case. Last year, for example, the action of the Sakhalin Oblast State Ecology brought against the defendant -- the company, Esson Oil and Gas Limited -- concerning compensation for the damage done to the natural environment, was dismissed because the company demanded that the case be transferred to the arbitration court of the Stockholm Chamber of Commerce. At that time, the mass death of fish, within a range of from 907.2 to 1,111.6 tonnes, was recorded by the SAKHNIRO Institute. But neither the environmental protection prosecutor's office nor the oblast committee to protect the environment could take the matter to court. The companies, in response to all the claims, handed over taunting dispatches, the sense of which boiled down to the fact that the entrepreneurs would not be responsible for stupid fish, which eat God knows what. Vera Mishchenko, president of the Ekoyuris Institute of Ecological-Legal Problems, told us that it is difficult to find the truth when the consistent squandering of natural resources goes on in the country. Licenses for an activity, particularly in the sphere of oil extraction, are issued to anyone you like. Two years ago, ecologists, accusing state officials of what was going on in Sakhalin, sent materials to the General Prosecutor. There however, in the best Soviet tradition, they sent the papers on to the Sakhalin prosecutor's office, which justly replied that it was not competent to monitor the activity of state officials at the federal level. _______________________________________________ Crashlist resources: http://website.lineone.net/~resource_base To change your options or unsubscribe go to: http://lists.wwpublish.com/mailman/listinfo/crashlist
