Commentary: The Pipes are Calling!

Publish date: November 21, 2005

Written by: Grigory Pasko

MOSCOW—The Russian Natural Resources Ministry has taken a dramatic U-turn and approved the construction schedule for the East Siberia-Pacific Ocean pipeline (ESPO), part of which runs close to the fragile ecosystem of Lake Baikal.

East Siberia pipeline project gets the gas

Nevertheless, the Ministry is continuing to insist that the pipeline terminate in Russia’s Far East not at Perevoznaya Bay, next to three nature reserves, but at the port of Nakhodka, near Vladivostok.

Previously, the Ministry had repeatedly indicated that the technical and economic survey (TES) for the first stage of the pipeline was not in accordance with Russian legislation, and the issue of the pipeline route around Lake Baikal “was not solved in accordance with established procedure”.

Ahead of Putin’s visit to Japan
Several days ago the ESPO construction project was discussed by Industry and Energy Minister Viktor Khristenko and Japanese Ambassador to Russia Issei Nomura. The pipeline to the Pacific Ocean is one of the economic and trade issues that could be discussed during President Vladimir Putin’s forthcoming visit to Japan.

Deputy Natural Resources Minister Valentin Stepankov wrote in a letter sent in September to the acting head of the Federal Service for Energy, Technology, and Atomic Oversight (FSETAN), Andrei Malyshev, that the TES for the ESPO project did not meet requirements set out in Russian legislation.

“With any oil-pipeline route that runs within the drainage basin of Lake Baikal and crosses a number of springs, emergencies involving oil leaks are fraught with the danger of destroying the lake’s unique ecosystem,” Stepankov wrote.

“And the nearer an accident happens to the shoreline, the greater the environmental risks.”

What has spurred the Ministry into life? According to Kommersant daily, the Ministry’s haste was provoked by the personal intervention of Putin, who at a recent cabinet meeting “reproached the state bodies for sluggishness in the realization of the ESPO project.”

On the map, the proposed pipeline will run extremely close to Lake Baikal, a specially protected natural area that is even the subject of a special Russian law.

Extremely close in this case means 800 meters from the shoreline. Transneft President Semyon Vainshtok had previously mentioned a distance of 2 kilometers. In May of this year, Vainshtok said: “As for changing the route of the pipeline, it is possible that we will move the route nearer and subject the revised version to public hearings and state expert assessment.”

Earlier, the Natural Resources Ministry was categorically against such proximity, especially as the already approved project proposed laying the oil pipeline outside the lake’s drainage basin.

But the president only had to “reproach” the Ministry—in the person of Natural Resources Minister Yury Trutnev—for the Ministry to embark on a rapid U-turn. Now, according to the Ministry, it should be possible to complete all expert assessments and an approved TES by December 30th of this year—in a manner of speaking, as a Christmas present to Transneft, the pipeline client, and Putin personally.

Other deadlines set by the Natural Resources Ministry testify to Minister Trutnev’s selective alarm: Rostekhnadzor’s conclusions should be delivered by December 28th, and those of the federal state expert assessment agency by December 30th. Resolutions of the Health and Social Development Ministry, Agriculture Ministry, federal environmental monitoring service, Emergency Situations Ministry, and Culture Ministry should be ready “yesterday” – i.e., by the middle of November.
It is also proposed that construction work on the pipeline be completed by August 30th 2008; oil-pumping stations by September 10th 2008; and the terminal at Perevoznaya Bay by November 8th 2008. The first oil is slated to be pumped on November 1st 2008.

The number of mentions of the year 2008 in these deadlines immediately calls to mind the end of Putin’s term of office in the same year. Could this be the reason for such obvious haste?
According to the political scientist and director of the National Strategy Institute Stanislav Belkovsky, Putin is more successful as a businessman than as president. And the president’s business is linked with Russia’s oil and gas.

“Nationalization a la Putin is a way of almost legally getting $50-70 billion dollars out of the country,” Belkovsky wrote in a recent article.

“This money ends up in private bank accounts—the beneficiaries of the Yeltsin-Putin privatization, the life-cycle of which in Russia’s politico-economic space comes to an end in this way. For Russia, these billions become the debts of state bodies, and taxpayers and individual gas users will service them—the same population that in 2007 will have to pay 50 percent extra for ‘blue fuel’ gas.”

If Russia’s current president is in fact tying his future to the energy business, then the forthcoming meeting with the Japanese leadership is very important for him. It would, of course, be nice to think that it is important for Russia as well.