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WWF-Russia: 4 arguments against the ExxonMobil-BP agreement

01 september 2011
WWF criticizes the agreement, which brings closer the start of Arctic deepwater drilling

On Tuesday Rosneft and Exxon Mobil signed the agreement on strategic partnership. ExxonMobil will help Rosneft to extract oil and gas in the Russian Arctic (first of all, at three fields in the Kara Sea). Besides, the Russian company will get access to Exxon Mobil projects in North America, including deepwater projects in the Gulf of Mexico, and Canadian Hibernia project.

Environmentalists point out 4 negative sides of this agreement.

No technology for oil spill cleanup in the Arctic

Starting with the first attempts of Rosneft to create strategic partnership with BP it became clear that one of the main motives of the company is to get access to deepwater drilling technology in the extreme conditions that Russia lacks today rather than to attract foreign investment. For example, Exxon Mobil participates in the Hibernia offshore project in Canada, which has climate conditions similar to those in the Russian Kara Sea.

However, Exxon Mobil also has negative experience in the Arctic, such as Exxon Valdez spill – one of the biggest environmental catastrophes caused by the oil industry activities.

WWF believes that the currently available technology doesn’t allow fast and efficient cleanup in the Arctic seas due to such factors as lack of natural daylight, extreme cold, moving ice floes, high winds, low visibility, lack of infrastructure, etc. “WWF has often pointed out the fact that there are no available effective oil spill cleanup techniques in the ice conditions and under ice cover, but the greed to exploit resources of the Arctic distorts rational thinking and lessons of such catastrophes as ExxonValdez and Deepwater Horizon,” says Mikhail Babenko, WWF Arctic NI oil and gas program coordinator.

Safe alternatives are available

Oil companies themselves admit that Russia can “free” a lot of energy by making improving its energy efficiency. For example, Russia annually loses 40-50 billion m3 of gas due to burning of associated gas (for comparison: the Moscow’s entire energy system needs about 30 billion m3 of gas a year). The oil extraction ratio is very low in Russia (0.30). Increasing the ratio to 0.37 would provide additionally about 75 million tons of oil.

Burden on Russian taxpayers

Infrastructure development in the Arctic will be a heavy financial burden for Russian taxpayers and the budget. Russian tax code subsides oil exploration and extraction in the extreme conditions as it does now in the Eastern Siberia and Nenets region.

By our estimates, based on open information of the Ministry of Finance, Accounting Chamber, and corporate reports, in 2010 mineral extraction tax relief aimed at stimulating the extensive development of new fields in Russia amounted to about USD 3.5 billion , and export customs duty relief totaled about USD 4 billion,” says senior advisor of WWF-Russia Ivetta Gerasimchuk.

Possible complications for international climate talks

Exxon Mobil has been known for funding various climate skeptic research projects. “I’m afraid this deal may tempt Russia to join climate skeptics,” says Mikhail Yulkin, head of climate change working group of the Russian Union of Industrialists and Entrepreneurs. “If as planned only direct investments of the alliance in the exploration and drilling in the new fields, including the Arctic shelf, total USD 200-300 billion, and expected revenue is estimated at USD 500 billion, the companies will be interested in keeping oil and oil product prices high for many years to come; on the other hand, accelerated transition of the world economy to low-carbon scenario contradicts to the interests of the alliance. Russia’s position in the climate talks may come down to protracting them and impeding??? the decision-making process and opposing a compromise.”

On September 21-23, Archangelsk will host the International Forum “Arctic – Territory of Dialogue” with participation of Prime-Minister of Russia Vladimir Putin. WWF will speak at the forum and voice its proposals for safeguarding the Arctic environment. At present, environmentalists are gathering signatures under a petition against the Prirazlomnaya oil platform that is now being installed in the Pechora Sea by Gazprom. It is the first oil project on the Arctic shelf in the world.

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© WWF России