UPDATE: Putin puts all chips on Arctic oil development in Salekhard as courts begin jailing Greenpeace activists

Publish date: September 26, 2013

Written by: Anna Kireeva

MURMANSK – Russian plans to develop Arctic oil and gas fields at any cost, including unprecedented tax subsidies, despite oil majors’ lack of readiness, which camouflage their environmental unfitness for the task with loud promises about high ecological and technical standards.

Russia’s plans announced at the oil forum in Salekhard come during a week of major clashes between Gazprom, Russia’s state gas monopoly and activists from Greenpeace, who were last week arrested for trying to scale Gazprom’s controversial Prirazlomnoye platform in the Pechora sea from their vessel, the Arctic Sunrise.

As of this writing five activists, including the Arctic Sunrise’s captain, and a freelance photographer from the Greenpeace vessel have been remanded by a Murmansk court to pretrial detention as the court seeks to determine whether 28 other Russian and international defendants should be held in remand while investigators probe the piracy charges they could face.

All 30 activists aboard the vessel were brought from Severomorsk to various Murmansk area jails to await Thursday’s court hearings, despite signals from Russian President Vladimir Putin that the charges of piracy threatened against them were too extreme. Putin did, however, condone the actions of the Russian Coast Guard.

The proceedings against the activists in Murmansk’s Lenin district court, which are being broadcast on live national television, have thus far singled out photographer Denis Sinyakov, remanding him to two months pretrial detention on the pretext that he is not a resident of Murmansk and frequently travels abroad, the Interfax news agency reported (in Russian). 

Also remanded for two months was Greenpeace activist Roman Dolgov, according to RT, Russia’s state controlled English-language broadcaster.

The official twitter feed of the Arctic Sunrise, called Free the Arctic 30, also reported that Polish activist Tomasz Dziemianczuk, and New Zealand crew member David John Haussmann have also been remanded to two months pretrial detention.

The Associated Press reported that Canadian campaigner Paul Ryzincki had also been sent to pretrial detention. Arctic Sunrise captain Peter Willcox, long-time captain of Greenpeace’s Rainbow Warrior, has also been jailed for two months before trial, according to the Russian news portal Russkaya Planeta’s real time feed on the court proceedings.

None of the activists have yet been charged with a crime, though Greenpeace confirmed in a statement that all of the activists have now been questioned in the presence of lawyers. The hearings on pretrial detention for the activists were expected to continue late into the night Thursday or early Friday morning, according to the Russian b-port news portal. 

Kumi Naidoo, Greenpeace’s International Executive Director wrote in his twitter feed that,” I say, they are jailing our activists because they fear what peaceful activism can accomplish.”

More remand rulings against the activists were expected to be handed down later Thursday. The activists hail from 18 different countries: Argentina, Australia, Brazil, Britain, Canada, Denmark, Finland, France, Italy, the Netherlands, New Zealand, Poland, Russia, Sweden, Switzerland, Turkey, Ukraine and the United States.

Article 227 of Russia’s penal code defines piracy as “an attack on a ship at sea or on a river, with the aim of seizing someone else’s property, using violence or the threat of violence. A conviction carries a 15-year jail sentence and a 500,000 ruble ($15,500) fine.

The Arctic Sunrise, was towed into the port of Severomorsk, near Murmansk on Tuesday, five days after armed and masked agents of the Federal Security Service (FSB) descended from helicopters and took control of it.

Russia’s Investigative Committee – a rough equivalent of the American FBI – has threatened to charge the activists with piracy, but President Vladimir Putin’s remarks at the Salekhard forum questioned the severity of the Investigative Committee’s charges.

“I don’t know the details of what happened there,” Putin told the international conference, “but obviously they are not pirates. However, formally, they tried to seize our platform.”

Putin’s spokesman, Dmitry Peskov late on Thursday told the Interfax news agency that the president is “not accusing anyone.”

“[Putin] expressed his point of view, and the Investigative Committee is working further,” Peskov told the agency. “All questions must be addressed specifically to the Investigative Committee – the president has no right to accuse anyone.”

Russia’s human rights ombudsman Vladimir Lukin praised the actions of the activists as “admirable” in an interview with the Interfax newswire, and voiced hoped they would not be punished too severely– though he did concede that Greenpeace’s methods were “eccentric.”

“Activities aimed to protect the environment are honorable,” Lukhin told the news agency.

Opening a new chapter in the Arctic – with no ecological bookmarks

Against the background of a confused, internationally watched probe into the activists, Putin told the Salekhard conference in his opening remarks that: “At last year’s forum we talked about how a new chapter in the Arctic’s history has opened now, what we could call an era of industrial breakthrough, a time of rapid economic and infrastructure development,” according to the official transcript of his on the official Kremlin website.

“Russia is carrying out intensive work in the Arctic regions to explore and develop new oil and gas fields and minerals deposits,” said Putin. “We are building big transport and energy facilities and reviving the Northern Sea Route.”  

Russian Minister of Natural Resources Sergei Donskoi said the Arctic was the leading region on the planet in terms of resource reserves and diverse types of mineral ores, and that the continental shelf hosts the single most robust reserves of hydrocarbons, the recovery of which are the basis for future plans in the Arctic.

“The bulk of Russian hydrocarbon fields are concentrated in the Arctic zone, some 600 gas fields and more than 150 gas fields, two points of nickel extraction and more than 350 for gold,” said Donskoi. Calling the Arctic the “resource crown” of Russia, he added that Arctic resources provide some 11 percent of Russia’s gross national product and almost a quarter of its entire exports.   

Donskoi said the extractive potential of the Russian continental shelf lies somewhere in the region of 100 billion tons of fuel equivalent which would likely lead to the opening of several diverse oil and gas fields. The areas with the most potential, he said, were under the Kara and Barents Seas, to the north of European Russian and central Siberia respectively.

No price is too high

According to Donskoi’s ministry, harnessing the resources of the continental shelf would lead to a capitalization of the Russian oil and gas sector of 150 billion dollars, the state budget would receive some 1.5 trillion dollars in additional tax revenues, and the gross domestic product of the country would grow by three percent.

Where these figures are coming from is still a mystery because it has already been announced that oil companies wishing to work Russian Arctic shelf oil and gas field would receive colossal tax subsidies from the Russian government.

Donskoi said the Russian government was taking “unprecedented measures” to stimulate the development of Arctic shelf resources.

“They envision, specifically, differentiated tax rates on the extraction of useful minerals, the introduction of subsidies, the zeroing out of export tariffs, import customs tariffs, and value added taxes (VATs) for highly technical equipment,” Donskoi said. “A possibility has also been established to apply reduced [oil and gas] production tax rates at an oil price lower than $60 per barrel.”

In addition, the state will go even farther to cover the considerable costs of geological research, and will take upon itself the expenses for the first stages of creating an infrastructure such that businesses benefit from detailed geologic surveys and the construction of mineral extracting complexes.

Ecological promises fall short of reality

“It is clear to us that nature conservation and maintaining a balance between economic activity, human presence, and preserving the natural environment must be key priorities and principles in our work to develop the Arctic,” Putin told the Salekhard conference.

“Our state policy in the Arctic also takes as a basic principle the establishment of special natural resource use regulations. In particular, the right to extract oil from deposits in the Arctic region can only go to companies that have the most advanced technology and the financial resources to support such projects,” Putin said.

Putin’s words, however, contradict actual practice. Russia’s only oil platform in the Arctic, the Prirazlomnoye, cannot by any stretch of the imagination be called a technological miracle.

The Prirazlomnoye is an amalgam of  Norwegian second hand materials added to Russian rigs that were never completed and were sent to the Kara Sea, which, for the second year in a row, has remained useless for drilling oil.

Environmental organizations have conducted special investigations on oil field development and have presented Gazprom, the Prirazlomnoye’s operator, with their conclusions stating that the threat of contaminating key territories is extremely high, while there remain no competent means of addressing a spill.

Gazprom has simply refused to publicly discuss the environmental aspects of the Prirazlomnoye project, and said that it would begin drilling this year.

Environmental conflict in the Arctic

The Prirazlomnoye is Russia’s first Arctic oil and gas project. Its implementation doesn’t leave the Arctic a chance, so in the absence of any dialogue with oil and gas companies, the only tactic left to environmental organizations is protest, such as that carried out by Greenpeace’s Arctic Sunrise.

The court proceedings against the activists taking place Thursday morning suggest that Putin – despite waving aside the piracy charges – wishes both to make an example of activists who would interfere with Arctic oil drilling, while at the same time trying to avoid diplomatic clashes.

“It is a shame that Russia take only an economic approach to the Arctic development, and that oil companies are practically given indulgences for risking the environment of such a vulnerable area,” Sigurd Enge, Bellona’s senior adviser on Arctic affairs, said. “In light of the developing situation in the country, no official can take upon himself the onus of contradicting Putin’s iron-fisted insistence on the ecological safety of Arctic oil ad gas development – and he certainly doesn’t want to hear from environmental organization is Russia.”