By Renfrey Clarke
MOSCOW — The direct price of Russian President Boris Yeltsin's "reforms" is to include the devastation of the north Russian landscape and rivers, and quite probably of the Arctic Ocean as well, as worn-out oil industry infrastructure is worked past the point of collapse in the drive to extract profits and tax revenues.
This is the horrifying picture which is forming as environmentalists consider the meaning of the huge oil spill that has occurred in the Komi Republic 1600 kilometres north-east of Moscow.
The disaster happened because an oil pipeline was kept in service long after it was plainly in dangerous condition. Even when the pipeline entered a phase of rapid disintegration, Russian and Western oil firms kept pumping oil through it at high pressure.
The result was a massive oil spill destined to destroy almost all plant and animal life in a large expanse of swamp and forest. In the final scene of the tragedy, heavy rains breached a containment dam, allowing a flood of oil to pour into a local river.
The 52-kilometre Vozei branch oil pipeline entered service in 1975, and was eventually privatised under the ownership of the Russian oil firm Komineft. The conditions under which the pipeline operated were punishing — a combination of fierce winter frosts, hot high-sulphur oil and corrosive salts. Komineft executives have admitted that such conditions are capable of eating away as much as 2 millimetres a year of the 8-mm steel sheet from which such pipelines are constructed.
Astonishingly, perhaps, the Vozei pipeline withstood these trials until 1988, when its first failure due to corrosion was recorded. Between 1988 and 1994 a further 10 such holes were found, and the sections involved were patched or bypassed.
The first massive leak occurred in February 1994. By August, a further 20 holes had been detected. The pipeline was now in a state of accelerating collapse, and moves were at last under way to replace it. Earth dams were built in an attempt to contain the spilled oil, but little effort was made to clean up. On August 17 the worst breach of all was discovered.
For Komineft and the other firms that used the pipeline, two more or less responsible courses of action were available. One was to cease pumping altogether until the new pipeline, due to be finished in December, was completed. Choosing this option would have forced the evacuation of local towns which depend for their heating on gas condensate from the pipeline.
A second, less satisfactory, option was to keep the pipeline operating at the minimum flow needed to stop the heavy oil from cooling and solidifying, and to continue trying to repair the leaks.
Neither option was put into effect. Various oil extraction firms refused to stop pumping, except for a few days while a "loop" was installed around the worst of the leaks. The culprits were not exclusively Russian; the first firm to refuse to stop pumping was reportedly KomiArcticOil, a consortium of Gulf Canada, British Gas and Komineft.
Inevitably, the pipeline began to leak like a sieve. By September 6, more than 62 holes had been discovered. There were at least seven oil lakes along the pipeline, and swamps were overlaid with oil to a depth of 10-15 centimetres. Greenpeace reported that a total of 68 square kilometres was affected. The attempts to keep the oil dammed up were ineffective; during September oil was detected in the nearby Kolva river at 20 times the maximum permitted levels.
Then, after heavy rain at the end of September, a seven-metre dam wall gave way, and a torrent of oil poured into the Kolva. Backwaters of the river were covered with a layer of oil 10 centimetres thick. Komineft and officials of the Komi Republic did their best to conceal the disaster, but the alarm was eventually raised by employees of a US oil firm working in the area.
Reports in the US press in late October suggested that the total quantity of oil involved might have been as high as 2 million barrels (318,000 tonnes). Studies now indicate that the most likely quantity was 65-70,000 tonnes. This is still the equivalent of more than a thousand railway tank cars, and more than twice the amount of oil released in the 1989 Exxon Valdez disaster in Alaska.
After the dam collapsed, some 140 Komineft employees equipped with little more than shovels were mobilised for a token clean-up. Meanwhile, a five-metre-wide oil slick floated downstream to the Usa and Pechora rivers. By mid-October winter had set in, the landscape was covered with snow, and the clean-up had been halted until April.
Western environmentalists have voiced alarm at what will happen during the spring floods, when damming up polluted water will be impossible. The floods will certainly carry the lighter fractions of the oil to the Pechora River and the Arctic Ocean. But most of the oil in this case is heavy, and together with sediments and vegetation will form toxic clumps that will be washed along the river beds. Such clumps are already commonplace in the Pechora, where the fish population has declined drastically in the past 20 years.
In Arctic conditions, the oil will not break down completely for as long as 50 years. Vegetation will take as much as a century to return to its former state.
After news of the accident reached the media, the Komi authorities and the Russian Fuel and Energy Ministry did their best to pretend that the situation along the pipeline was "normal", suggesting that such spills ("a few drops") were almost routine. Unfortunately, the officials were not altogether wrong.
Russia has some 48,000 kilometres of oil pipelines. According to the Moscow daily Nezavisimaya Gazeta on November 1, thousands of kilometres are overdue for replacement, or in positively dangerous condition. In this respect, the paper observed, the Vozei branch line was "no better or worse than others".
Every year there are thousands of recorded leaks. Greenpeace cites figures indicating that as much as 8-10% of the oil pumped into Russian pipelines pours out en route, with annual flows into the environment ranging from 25 to 50 million tonnes. These figures, Greenpeace stresses, correspond to "the most modest official estimate". If this information is anywhere near correct, many hundreds of square kilometres of Russian territory are rendered lifeless each year.
The two largest oil spills known to Greenpeace both occurred in Tyumen province in western Siberia. In the south of the province in 1989, around 500,000 tons poured out. In May-June 1993 in the Khanty-Mansiysky National District, an estimated 420,000 tonnes were spilled; much of this oil finished up in the Ob river, which flows into the Arctic Ocean. Neither accident was widely reported.
Although the first of these mega-spills occurred during Soviet times, it should not be supposed that the environmental havoc now being wrought by the Russian oil industry is essentially a hangover from the past. To the grim environmental legacy of "barracks socialism", the "feral capitalism" of today is adding new dimensions of destructiveness.
In the Soviet era, the pressures from planning bureaucrats to maximise oil output were at least accompanied by relatively adequate funding. Now, investment in renewing infrastructure has fallen drastically, while the demands of the planners have been replaced by no less intense pressures from shareholders and tax officials.
The Yeltsin regime has a powerful incentive to ignore and cover up reckless practices by oil producers. Just as income from oil and gas exports was central to postponing the fall of the Soviet Union for a decade and a half after the problems of the "command economy" reached critical levels in the mid-1970s, energy exports today are central to the project of restoring capitalism.
As Russian industry has been privatised — and in large part, shut down — energy sources have become available for export. Although production of oil declined in Russia in 1993, the volume of fuel and energy exports grew by 23%. In all, the fuel and energy complex accounted for about half of Russian export earnings last year, a proportion which is tending to rise.
The growth in oil export earnings has been limited by lower prices, but it has nevertheless been an important factor behind one of the paradoxes of Russia's new economy: at the same time as industrial output and gross domestic product have fallen, consumption by the population has risen strongly. This rise has been very lopsided — only about a third of the population has really benefited — and it has not been reflected in the level of real wages. Nevertheless, the increase in consumption has been real enough to have saved Yeltsin from an explosion of political opposition.
The earnings of the fuel and energy sector are also of critical importance to Yeltsin as the source of a large and increasing share of federal revenues. In 1993, this proportion already amounted to about 40%.
Logically, the Russian government should provide incentives for investment in the oil industry, to help ensure that the decline in oil production — likely to reach about 13% in 1994 — is at least slowed. But the regime's need for revenues has been so acute that even the vital oil industry has been starved of operating funds.
"In the price structure of oil products", the newspaper Trud reported in May, "various state taxes account for around 70-90% of the total. The tax policies are leaving the enterprises without the minimum funds they need for their functioning and development."
The fuel and energy complex is also among the areas of Russian industry worst hit by the crisis of inter-enterprise payments. At the beginning of August debts to the sector were put at 35 trillion roubles, at that point about US$15 billion. Although the oil industry is regarded as potentially one of Russia's most profitable, it has been hit repeatedly by labour struggles as workers have tried to force the payment of long-overdue wages.
It is not surprising that managers in the oil industry, as in most other economic sectors, have cut investment to the bone. Often, the cutbacks have extended even to failing to repair or renew existing plant and infrastructure — including pipelines. Explaining why they had not replaced the Vozei pipeline long ago, the managers of Komineft cited an acute shortage of funds.
The general situation with pipeline construction in Russia is illustrated by the problems of the oil and gas construction firm Rosneftegazstroi. In the first half of 1994 this firm reportedly laid less than 20% of the length of pipeline it built during similar periods in the late 1980s.
Worse to come?
While using worn-out pipelines, oil industry managers needing to maximise export sales have a strong inducement to keep pumping at full pressure. With the government, local authorities and company executives all sharing an interest in taking enormous risks, disasters are inevitable. And as more and more pipelines reach a state of near-disintegration, the number of such catastrophes can only increase.
Unless, one might object, international capital comes to the rescue. The Russian oil industry is indeed one of the areas of the country's economy most attractive to foreign investors. However, one needs to remember the industry's huge size — until recently Russia was the world's largest oil producer — and the general level of decay of its fixed assets. Estimates suggest that if all the foreign capital that is likely to enter Russia during the next five years were invested exclusively in the oil industry, it still would not be enough to do more than to halt the decline in oil extraction. There is no prospect of foreign investors paying for a huge program of replacing thousands of kilometres of pipelines each year.
Meanwhile, there is no reason to think that Western oil firms are any kinder to the environment than Russian ones, when the checks on them are few. The example of KomiArcticOil is proof of this.
Renewing the infrastructure of the Russian oil industry is a task that will have to be carried out mainly on the basis of funds originating within Russia itself. But if this wealth is to be accumulated and directed into essential investment instead of being squandered on luxury imports for the well-off, a very different model of reform will be required. This model will have to rest on a quite different disposition of political and social forces.
So far, Western governments have backed Yeltsin and his policies through coups and tank assaults, rigged polls and economic collapse. But the real cost of persisting with the present "reforms" may well turn out to be far greater: environmental destruction of hemispheric scope, with its consequences persisting into the 22nd century.