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WWF: Russia needs a fund similar to the US Oil Spill Liability Trust Fund

23 september 2011
Archangelsk, Russia. At the International Forum «Arctic - territory of dialogue» WWF voiced its concern over the draft of the oil pollution law that has been approved in the first reading by the State Duma of the Russian Federation this week.

According to WWF, the draft law does not introduce an efficient financial base for oil spill cleanup, key to ensuring safety for the marine ecosystems. It suggests that companies use only one of the financial mechanisms – banking collateral, insurance, or the operating company’s own reserve fund. However, international and Russian experience shows that these funds are often insufficient even for cleanup of medium oil spills.

Even a giant like BP was almost bankrupted by an oil spill in the Mexican Gulf”, says Alexey Knizhnikov, WWF-Russia oil and gas policy expert. “Smaller Russian companies will hardly have enough funds to clean up even a medium oil spill in the harsh Arctic conditions”.

Cleanup of the Exxon Valdez spill cost at least $2.5 billion, and cost of the BP spill in the Mexican Gulf is estimated at billions of US dollars. In 2007, after the spill of 3000 tons of crude oil in the Kerch Strait, located between Russia and Ukraine, Russian environmental watchdog Rosprirodnadzor assessed the environmental damage at 6.5 billion rubles (however, the court dismissed Rosprirodnadzor’s claim against the company responsible for the oil spill).

The recently constructed Prirazlomnaya oil platform in the Pechora Sea - the first oil drilling project on the arctic shelf in the world - is insured for only 7 million rubles.

The platform with a total capacity of 120 thousand tons of oil is going to operate in the severe weather conditions, and cleanup of a medium or big oil spill cost much more than in the warm Mexican Gulf”, says Alexey Knizhnikov. During the cold season, temperature of the air here may drop to minus 40 degrees Celsius/Fahrenheit. According to the official website of Gazprom neft shelf, the operating company, wind and freezing temperature in the production area amount to 40% of the year, the number of sea storms is as high as 22 a year with an average storm duration of 9.5 days. Sea waves are 3.9 m high on average and 13 m high at maximum. Ice cover lasts for seven months a year from November to May.

The Oil Pollution Act, signed in the United States in 1990 in response to the Exxon Valdez oil spill, created the national Oil Spill Liability Trust Fund, which is available to provide up to one billion dollars per spill incident. WWF wants Russia to create a similar fund, and this suggestion was included into a different version of the draft law, developed by a group of lawyers (“Yegorov, Puguinsky, Afanasiev and partners”) on commission from the Committee on natural resources, nature use, and environment of the State Duma of the Russian Federation.

However, the Duma approved in the first reading the draft developed by the Ministry of natural resources and environment, which is not a full-written law but is a group of amendments to existing Russian laws.

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