Russia » Economics
Author`s name Ольга Савка

Russia Not Allowed to Extract Oil in Baltic Sea

LUKoil is said to be violating the law when it makes plans to extract oil in the Courland Spit
At a time when Russia's largest oil companies are considering the issue of transporting oil abroad and are seeking finance for this purpose, some oil oligarchs (certainly the smartest ones) have invented a method of delivering oil to the West practically without any oil pipelines and excessive spending. Russia's oil company LUKoil confirmed its intention to start oil extraction on the Baltic Sea shelf, near the Courland Spit (Kurshskaya Kosa) situated 22 kilometers from the shore in the Kaliningrad region, close to the Russian-Lithuanian borders. But not only ecologists and anti-globalists are protesting against this project, but governments of the Baltic countries and international financial organizations are also strictly criticizing the plan. Even the European Bank for Reconstruction and Development’s (EBRD) President Jean Lemierre (the Bank is LUKoil's largest creditor) is anxious about the plan; he now hesitates as to whether the Russian oil company may be given more loans.

Russian ecologists met Jean Lemierre at the 12th annual EBRD session that was held in Tashkent before the Victory Day. Jean Lemierre met with representatives of the ecological organization Ecodefense who complained about LUKoil activity. The ecologists told Jean Lemierre that LUKoil violated the law when the oil company organized public discussion of oil extraction at the D-6 oil field. In their words, representatives of the oil company restricted access of ecologists to the oil field, while citizens were deprived of the constitutional right for information. What is more, LUKoil refused to hold an independent public evaluation of the oil field development project. The ecologists gave the EBRD president a report on the problem. They asked Jean Lemierre to suspend financing of LUKoil until the dangerous project at the D-6 oil field is stopped and the company itself holds an internal investigation concerning violation of the law and restriction of access to information.

Jean Lemierre didn't make promises that financing of LUKoil would be stopped. However, he emphasized that ecology was a very serious issue, and the EBRD president promised that bank specialists would discuss the issue with managers of the Russian oil company. In fact, the European Bank for Reconstruction and Development has the means to do this, as LUKoil is the EBRD's largest debtor in Russia. The oil company headed by Vagit Alekperov borrowed $150 million from the EBRD in 2000; the money was meant for development of the D-6 (Kravtsovskoye) oil field. The loan was taken for a three-year period. Right after borrowing the loan, LUKoil’s president declared he was ready to pump oil from the Baltic Sea floor. At that time, the European bank had no objections to the plan. What is more, other parties concerned had no objections to the plan as well. Vagit Alekperov clearly declared that he wasn't going to submit documents concerning oil platform construction for public discussion. He said an evaluation on the governmental level in Russia was quite enough. Why is Jean Lemierre so skeptical about the issue now?

As for Vagit Alekperov, he explained his reluctance to make his oil plans public in this way: "The documents contain commercial classified information which costs a lot and is very attractive for competitors. The project employs modern technologies, including those guaranteeing the ecological safety of sea oil platform exploitation. While we carry out the plan, we follow the Russian legislation which stipulates that documents of this kind can be provided to qualified authorities only. I would like to mention, moreover, that, just like ecologists, we are interested in observance of ecological requirements and norms; we are responsible for them in fact."

Under the pressure of ecologists, a committee for economic policy in the Kaliningrad regional parliament organized a special public hearing on the problem. Deputies of the regional parliament listened to reports delivered by representatives of the company LUKoil-Kaliningradmorneft and reached a conclusion that technologies which LUKoil planned to use for oil extraction would cause no damage to the environment. At that, it was added that the Kaliningrad region would derive profit from realization of the project: the oil company will make payments for water resources usage, compensation payments for impact upon natural objects and payments to ecological funds. It was said that during realization of the project, the Kaliningrad region would get 3.8 million rubles for maintenance of its fish reserves. For the period of oil platform construction, 500 new workplaces will be created in the region, and 300 will remain permanent after the construction is over. Deputies of the regional parliament especially liked the fact that operation of the oil field would increase the investment attractiveness of the Kaliningrad region. This fact is very important for the region, as the economic situation there is unfavorable now as compared with the rest of Russia. However, their Baltic neighbors seem to be irritated and scared by the prospect of oil development near them.

The local ecological movement Ecodefense still blames LUKoil for different faults and insists that another independent public assessment should be held. They mean that experts from EU countries should be engaged in the expertise. The ecological organization insists that realization of LUKoil's project is extremely harmful for the environment. Also, they demand that LUKoil should unveil its secrets to the international community, by which they mean to say EU experts and governments of the neighboring Baltic states. Is the anxiety of ecologists well-grounded?

A report developed by the Ecodefense organization and the Baltic Information Resource Center says that an accidental oil spill could cause irretrievable damage to the exceptionally vulnerable ecological system of the Courland Spit national park. scientists say the biological variety is unusually high in this very region. The Lithuanian and Russian parts of the Courland Spit were included in the UNESCO's World Heritage List in 2000 (exactly the year when the EBRD gave a loan to the Russian oil company).This fact certainly makes any company using natural resources more responsible for its activity there. At the same time, it doesn't mean that oil extraction is categorically prohibited in the region.

The co-chairman of Ecodefense, Vladimir Slivyak, reminds all concerned that construction of an oil platform on the Courland Spit was started in 1985. However, the work was stopped because of strong protests from the community. At that time, the public community protested against an oil spill when, as a result of test drilling, about 70 tons of oil leaked into the sea. A great deal of that oil reached the shores of the Courland Spit; almost 20 kilometers of the coastal strip on the Russian and Lithuanian territories (the whole of the territory was part of the Soviet Union at that time) was contaminated. However, we should keep in mind the events that occurred in the country in 1987. An anti-Soviet revolution hit the former Baltic republics of the USSR, outbursts of nationalism were violent and mass protests lasted for weeks sometimes. It is quite clear that development of a new oil field was a minor problem at that time. It is not ruled out that the oil spill itself was a diversion by enthusiastic patriots of Baltic independence.

Nowadays, Ecodefense focuses on a different aspect of the problem. As the co-chairman of the organization says, the national governments of the Baltic countries, municipal administrations and bipartisan and international donors (the EBRD, the World Bank, the European Community, Sweden, Denmark, etc.) have already invested millions of dollars in into development of tourism and the environmental protection and ecological projects of the region (Lithuania is meant, certainly). However, as LUKoil is going to extract oil there, the above-mentioned investments, he says, are jeopardized. It seems strange that Russian ecologists are so anxious about investments meant not for Russia’s Kaliningrad region, but for neighboring territories that will soon become EU territories. Especially since the protests of ecologists go well with statements of politicians in the Baltic countries.
We would like to get back to the unprecedented campaign against LUKoil plans to extract oil in the immediate vicinity of the national park and of the Lithuanian resort territory (the white-sand beaches of Nida where European capitals were invested). Although the Russian Ministry for Nature informed the Lithuanian Ministry for Environment of assessments made of all stages of LUKoil's project, Lithuania still insists that the Russian assessment was unreliable. For Lithuania, any kind of industrial activity is prohibited in the region close to the Courland Spit. But this doesn't mean that the situation in Russia's Kaliningrad region must be the same. Some politicians even attempted to link the oil production problem on the D-6 field with the problem of granting visas to Kaliningrad citizens.

At the 3rd session of the interparliamentary forum of Lithuania's Seym and the Kaliningrad regional parliament, Lithuanian Vice-Minister for the Environment Emilis Gustainis said that development of the D-6 oil field was possible if LUKoil purchased modern technologies in Europe and invited respectable European experts to work.