/IPS ENVIRONMENT BULLETIN/ RUSSIA: Amoco Oil Exploration Plans in Russia Assailed

By Pratap Chatterjee Reprint | | Print |

Pratap Chatterjee

SAN FRANCISCO, Sep 14 1996 (IPS) - Environmental groups warn that a proposed World Bank loan for the Chicago-based Amoco oil company to drill for oil in western Siberia could have serious environmental consequences.

Russian joint venture partners plan to explore for oil in the Khanty-Mansiysk region in North Priobskoye on the Ob river, an area with strands of spruce and pine forests that interlace vast, ecologically sensitive swamps.

Amoco, which has revenues of 30 billion dollars a year, runs oil and gas exploration activities in places as far flung as Trinidad, China, and the Nile Delta in Egypt.

The proposed exploration will affect the Khanty, and possibly the Nenets and Mansy indigenous peoples who make a living herding reindeer, hunting and fishing in the area. It will also have an impact on the Selyarova people, a Russian peasant community which has been producing hay on collective farms in the fertile grasslands around the river for the last 60 years.

The southern part of western Siberia has been exploited for the last 30 years, but geological experts estimate that the rest of the region holds additional oil and gas deposits worth up to 1.5 trillion dollars.

Existing explorations have brought a huge influx of people to the area. Khanty-Mansiysk today has a population of one million, up from 150,000 in 1970. Roads built for these operations have attracted logging companies, while oil spills are commonplace and often result in forest fires.

But many areas are still quite sparsely populated and inaccessible. Only 400 people live in the area where Amoco plans to drill — some 100 kilometres from the oil town of Neftyugansk. To get out, local people use their own boats or hitch a ride on visiting helicopters.

The new Amoco venture will be jointly conducted with Yuganskneftegaz, a subsidiary of Yukos, one of the five biggest oil companies in Russia. Yukos is controlled by Menatap, a Russian commercial bank.

Despite frequent oil shortages in Russia itself, the main market for Siberian gas and oil lies in Western Europe.

Charles McPherson, the Bank staffer in charge of the loan, as well as possible financial guarantees for Amoco’s proposed explorations, says the loan could be approved as early as next June.

“The problem right now is the Production Sharing Agreement with the Russian government. Amoco says it will not invest unless there are guarantees that it will be able to repatriate its profits,” he told IPS.

But Ellen Schmidt, author of a new study sponsored by the World Wide Fund for Nature and a German environmental group called the Association for World Economy, Ecology and Development (AWEED) say there are other possible problems.

“Western Siberia is already an ecological disaster area because of its many oil mishaps. Any oil accident would have serious consequences, that could reach upriver to the North Polar Sea,” according to Schmidt.

Just last year, oil exploration operations in the Komi region of European Russia resulted in a huge oil spill that was cleaned up after the World Bank rushed through a 100-million-dollar emergency loan.

Recent studies also have shown that oil spills have doubled or even tripled the frequency of forest fires, while road construction has brought an influx of new logging industries.

Project documents indicate that several fish species, including carp and the perch pike, could be affected by the project. In addition, Skipyunova, a sacred site for the Khanty peoples, and Zenkova, a 450-year-old archaelogical site, would be destroyed by the project, according to its critics.

Amoco officials assured IPS that they were working hard to minimise such problems. “We want to leave the smallest environmental imprint as we can. We’ve done any number of soil, snow, vegetation, water and fisheries surveys to give us a picture now for future comparison in later years,” said Greg Clock, an Amoco spokesman.

Walt Younkin, Amoco’s chief environmental scientist in Neftyugansk, said the company has also conducted numerous meetings with local communities and provided them with monthly updates of what the company was doing.

“We will use the best possible technology and follow the standards that we use in North America, but there are going to be spills,” he told IPS. “We’d like to tell people that there won’t be any, but that would not be true.”

“We will use automatic systems to shut down the pipeline if a spill occurs so as to minimise any problems and clean it up quickly. The World Bank money will help train the government officials to monitor problems,” he added.

To prevent logging problems, Younkin said the company would not link roads built in the project area to pre-existing highways. “We will operate by hovercraft and helicopter. We will also run check points within our concession to prevent unauthorised logging if the government will let us,” he said.

There are only 80 indigenous people left in the region, he said. “We have signed agreements to make monthly payments with the people who have family land title. It’s very sad though because there is a major alcohol problem, and at least one of them just drinks the money away,” he said.

But Gail Osherenko, a Vermont-based anthropologist who works with the Nenets peoples, dismissed the notion that the project will have only minimal impact as “wishful thinking.”

Russian and indigenous groups are adamant that the project should not go ahead. “We ask everyone to help us prevent an environmental nightmare. We ask you not to allow the use of your tax dollars, marks or kronor to facilitate further destruction of the environment,” wrote Alexei Grigoriev of the Socio-Ecological Union in Russia in a recent edition of Taiga News.

According to Boston-based investment consultants Kinder, Lyndenberg, Domini, Amoco does not have the best record of environmental management.

In 1992, for example, the company was fined 200 million dollars for a massive oil spill off the coast of France. It was six times larger than the spill made by Exxon Valdez off the coast of Alaska.

The company has had to pay out 500 million dollars in environmental clean-up costs over the years. As recently as last April, Amoco was fined 400,000 dollars for toxic discharges at a new-closed oil refinery in Caspar, Wyoming.

Amoco also has a history of trying to dump hazardous materials on indigenous lands, according to the Council on Economic Priorities, a New York-based group.

The group says that Amoco proposals to site incinerators on Kaw tribal land in Oklahoma, the Chickaloon village in Alaska, Cherokee lands in North Carolina, Navajo lands in Arizona and waste disposal facilities on Kaibab Paiute tribal lands, also in Arizona, have all been rejected by the indigenous peoples in recent years.