Oil for Ecology
Kommersant:
Western
banks join environmental protection campaigns: “Shell failed to
fulfill even its own environmental standards...”: Wednesday 21
December 2005
Natural Resources
The oil
and gas industry suffers a relenting pressure of
environmental organizations in many countries. Yet, the
influence of oil companies sometimes helps them get
through the loopholes in the ecological regulation. Working
in Russia is easier for oil companies as environmental
legislation is only at its dawn, while the state enforcement of
ecological norms is virtually non-existent. Nonprofit
organizations and western credit institutions are left to
monitor the environment protection at oil fields. They sometimes
succeed at getting companies operating in Russia pay more heed
to the environment.
World Experience
The U.S. environmental legislation is rather tough but lobbying
enables oil companies achieve the decisions which are quite
dubious in terms of ecology. This year, a 20-year long
confrontation between corporations and environmentalists over
the ban on economical activities in the National Arctic Reserve
in Alaska ended up with the victory of oil giants. On March 17,
2005, the U.S. Congress voted 51-49 favoring the start of
drilling at the reserve. Oil extraction in Alaska is not the
only way to diversify energy sources in the United States but
American companies find it far easier and more profitable to
develop ground-based deposits in Alaska than to operate on the
shelf offshore.
Oil majors are traditionally powerful lobbyists in the UK, the
Netherlands and other countries as well where they repeatedly
manage to bloc environmental initiatives of officials and
ecologists. The oil and gas lobby disrupted, for instance, the
introduction of the greenhouse emissions tax in the
EU, the United States and Australia and vehemently opposed
the ratification of the Kyoto Protocol to the UN Framework
Convention on Climate Change in some countries.
Barrier to Lobbying
The Russian environmental legislation has also bended under the
lobby pressure. In 1999, a governmental regulation permitted the
dumping of drilling agents during the work on the shelf, which
cut expenses for oil companies operating off Sakhalin. The
Government repealed regulation in 2000 after the Russian Supreme
Court had ruled it unlawful. Lawmakers, however, claim that oil
lobby is no longer in power at
the State Duma, or it is subject to the strict party
discipline, to be more exact. “The lobbying period finished when
the
United Russia faction had been formed. Executives of oil
companies are unlikely to negotiate the vote-through for their
bills with the faction’s head Boris Gryzlov,” says Vyacheslav
Timchenko, the deputy chairman of the State Duma’s Natural
Resources Committee and the party’s member. None of the deputies
from oil regions ventured to contest this opinion.
Oil companies look for other solutions, which is largely the
cooperation with profile agencies of the Russian Government.
This June, the
LUKOIL oil company drafted and presented for the examination
of the Natural Resources Ministry ecological requirements for
geological prospecting and oil and gas extraction in the north
of the Caspian Sea. As a matter of fact, the drilling job at the
company’s licensed plots are due to start in 2007, under the
contract. The governmental regulation 317 “On a Partial Change
of the Legal Regime in the Reserved Zone of the Northern Section
of the Caspian Sea” as of 1998 does not lay down, however,
guidelines for oil extraction in the reserved zone. Therefore,
the company submitted its draft for the ministry to examine it,
so that the oil giant could win time and retain licenses for the
plots. LUKOIL believes that the Russian section of the Caspian
Sea is nearly ready for the commercial extraction.
The withdrawal of the oil lobby from the legislature made
Russian state bodies pay closer attention to the environment.
The Natural Resources Ministry, the Industry and Energy
Ministry, the Emergency Situations Ministry and regional
authorities are currently dealing with the issues. That is why,
there is not point in hiding accidents, as oil companies claim.
Hidings do occur, though, according to Georgy Rezchikov, the
first deputy director of the oil, gas and natural resources
department of
Khanty-Mansi Autonomous Area, the territory accounting for
56 percent of the Russian oil extraction. The department’s
statistics put
Rosneft on the top of the accident list. “They come in first
only become they inform of every minor accident,” Mr. Rezchikov
explains. Environmental organizations also confirm that the
lion’s share of accidents during the oil extraction and shipping
to gas-mains are now underreported.
Metal Corrosion
Only three accidents were recorded last year in Khanty-Mansi
Autonomous Area. All the failures at oil fields were caused by
the human factor, i.e. poor control, errors in designing and
violations of safety norms. For instance, a well burst out with
an oil and gas blend to catch fire due to drilling safety
violations at the Talnikovsky oil field operated by LUKOIL West
Siberia in January. The damage totaled 11 million rubles. The
region’s environmental prosecutor’s office ordered an
examination of the accident with the
Russian Academy of Sciences. The experts confirmed that the
failure could not have prevented if all safety measures had been
taken. Prosecutors opened a criminal case against the
Urayneftegaz territorial-production enterprise (a subsidiary of
LUKOIL West Siberia) under Article 247 of the Russian Criminal
Code (“The Violation of Handling Rules of Ecologically Perilous
Substances and Waste”).
On March 11, an oil emulsion spillage was recorded at the
booster pump station following a metal corrosion at the
Ust-Balyksky oil field of Rosneft. The work of 249 well sites of
the Ust-Balyksky oil field and 20 wells of the Ombinsky oil
fields was suspended. The oil pipeline blew out on the following
day at the Ust-Balyksky field which put 92 more well sites at
halt. The failure was also a result of metal corrosion.
Environmental pressure groups are apprehensive not only about
oil extraction and transportation but also about temporarily
abandoned wells. The danger is that cement bridging there are
coming to ruin and metal parts of wells are subject to corrosion
because of the long downtime, which leads to a weakening
containment fraught with open gas-oil blowouts, oil spillages,
fires as as well as the soil and fresh water salinization. These
were the causes of a major ecological accident at the North
Alaska area of the Khanty-Mansi region in 1975. Well 35 was
drilled in 1958 on an island in the Ob River, near the village
of Berezovo. It gradually found itself at the mouth of the river
due to the offshore motion of sediments. As a result, the
drifting of ice damaged the well head causing gas blowout which
was extinguished only six months later. Expert estimate the gas
emission at over 180 million cu. meters. However, suspended
wells are under the jurisdiction of federal authorities, and oil
companies are not responsible for them.
Burden of the Past
Environmental NGOs demanded in 2001 that
TNK replace inter-field pipelines since they are the reason
for large oil spillages. The Russian branch of
Greenpeace states that some 1.5 million metric tons of oil
got onto the surface in 2000 in the area of Samotlor, TNK’s main
oil field.
Ecologists failed to make TNK meet the demand directly but after
the consolidation of the company’s oil assets with the Russian
assets of the British
BP in 2003, the joint company’s environmental policy changed
drastically. Environmentalists call it their victory since
TNK-BP is paying closer attention to the environment than
TNK used to.
Ivan Gogolev, the spokesman for TNK-BP, mentioned, however, that
TNK had also promoted high standards of environmental safety.
“Long before TNK-BP was formed, the Russian company announced
plans to invest $900 in environmental programs. The sum grew to
$1.7 billion after the new holding was set up,” Mr. Gogolev
recounted. The ecological program is scheduled for five years,
up to 2009, the spokesman said. Some $1 billion will be spent to
replace pipes, and not only in Samotlor.
Ivan Gogolev also stated that TNK-BP is of opinion that “it is
always cheaper and more profitable to prevent a problem than to
reap the consequences”. Yet, the company also has to “correct
mistakes of the burden of the past”. “Buying oil fields, the
company also got 5,000 hectares of contaminated area. We
restored 400 hectares last year and we are set to increase the
amount of reclamation every year,” TNK-BP spokesman concluded.
Burning Our Money
The percentage of the utilization of associated gas in Russia is
widely underreported, compared to licensing agreements. Oil
companies, however, burn the gas not out of sheer malice. The
gas is burn in the places where gathering, using or
transportation of it is pointless because the oil fields are
hundred miles away from gas-processing plants. Oil companies
officially burn up to 15 billion cu. meters of associated gas
every year, according to the head of the Federal Energy Agency,
Sergey Oganesyan. Both environmentalists and officials admit
that oil companies burn out much more.
The companies plead that it is technically difficult to stretch
pipelines to oil fields and install the gas treatment system so
that it has the appropriate quality for consumers. On top of it,
Gazprom imposes tough demands on oil companies for the
access to its system of associated gas. Still, authorities are
determined to make oil companies tackle this problem.
Requirements for the utilization of associated gas should be
toughened, according to Mr. Oganesyan. Oil companies are offered
to abstract all useful elements at the gas-processing settings,
after which they could pump it back to the deposit, instead of
burning. The creation of integrated plants to process associated
gas of oil extraction and oil refining is a point of the
Industry and Energy Ministry’s strategy for the industry. As a
part of it, the Khanty-Mansi Autonomous Area announced the
construction of a gas-processing plant in the area. Investor did
not show interest to it, though, and the local authorities
decided to bankroll the implementation of the project on their
own.
Banks Stand the Guard over Environment
The most efficient way to make oil giants follow environmental
requirements is now laying credit conditions, which major credit
institutions do not hesitate to do. The European Bank for
Reconstruction and Development (EBRD), for one, credits many
Russian oil and gas projects imposing quite strict conditions on
its clients. Besides that, a great number of large private banks
have been following the “Equator Principles” since 2003, which
is a set of social and ecological requirements for the projects
to be financed.
It is mostly thanks to creditors that the eco-friendliness of
oil companies has increased in Russia greatly. For instance, the
Sakhalin Energy operator faced the threat of the EBRD for
further crediting Sakhalin-2 and agreed to alter the route of
the underwater pipeline to by-pas the zone of the fatting of
grey whales. We should remind our readers that Sakhalin Energy
is set to attract $5 billion to carry out the second stage of
the Sakhalin-2 project to launch the project into the commercial
operation. Sakhalin Energy attracted credits worth of $348
million, the third of the sum belongs the EBRD, at the first
stage of the project, which required $1.5 billion. The bank’s
spokesman Geoffrey Hydie earlier announced that the bank was
considering a new $100 million investment in Sakhalin-2. “But we
must evaluate the project’s impact on the environment and hold
consultations before making the decision on our participation,”
he said.
World Wildlife Fund released a statement on December 16 urging
Shell (the main
shareholder of Sakhalin Energy) to suspend all maritime job
until the next annual registration report on whales is released.
The environmentalist also called on the EBRD to give up the
financing of the project. “Shell
failed to fulfill even its own environmental standards,” Paul
Still, a coordinator of the
WWF, said. “We are trying to convince the bank to suspend
the financing until
Shell carries out its obligations properly,” he summed
up. The EBRD, however, examined the documents, which
Shell had
presented, and decided to hold public hearings with the company
within next three months to convince the environmental community
in the safety of the project.
Requirements of creditors and environmental pressure groups have
also contributed to better technical solutions in Transneft’s
designing the Easter Siberia – Pacific Ocean oil pipeline. Yet,
environmentalists still disfavor the pipeline route which, as
they claim, is too close to Baikal (the start of the route) and
reserved zones (the outlet to the sea).
by Ivetta Gerasimchyuk, Larisa Rychkova,
Denis Skorobogatko
Russian Article as of Dec. 20, 2005
|
