Fire on Ice: The Environmental Fallout of Russia's Oil and Gas Industry

Russia It is not a stretch to say that Russia’s inclusion in the Group of Eight industrialized nations (G-8) reflects in large measure that country’s role as a global energy supplier. The G-8, known as the G-7 until Russia’s induction in 1997, is an informal forum tasked with coordinating economic and social policy in the world’s wealthiest and most powerful nations. Formed in 1975 in the wake of the OPEC oil crisis, the group continues to retain its potent and exclusive character: with its members accounting for 49 percent of global exports, 51 percent of industrial output, and 49 percent of the assets of the International Monetary Fund, it has the ability to effectively shape the global agenda.

As Russia seeks to strengthen its position on the international stage, it has embraced the energy sector as the key to its economic growth. The nation’s economy suffered severe contraction following the demise of the Soviet Union in the early 1990s. After an interlude of relative calm, it again underwent serious meltdown in 1998 as a result of the Asian financial crisis and disastrous government policies. Since this time, however, Russia’s gross domestic product (GDP) has expanded at a steady rate, averaging 6.4 percent annual growth.

This expansion has been driven by soaring energy exports, bolstered by high resource prices and a cheap rouble. Russia is home to an estimated 32 percent of the world’s proven natural gas deposits—far more than Iran, which boasts the second-largest share at around 15 percent. Russia also has significant oil deposits and is viewed in Western diplomatic circles as a potential counterweight to OPEC. Its vast Arctic and sub-Arctic wildernesses contain huge and relatively unexploited reserves of oil, gas, coal, minerals, and other strategic resources. Extraction of these riches has been the mainstay of the Russian economy since czarist times, and after the turmoil of the 1990s the sector is again becoming the main engine of growth.

Yet rising resource extraction and exploration threaten the survival of a different sort of natural wealth. In addition to being rich in fossil energy sources, Russia is home to 20 percent of the world’s remaining boreal (sub-Arctic coniferous) forests as well as the world’s largest freshwater lake by volume, Lake Baikal, which contains unique and fragile ecosystems. The Siberian Far East is the natural habitat of a rare sub-species of tiger and of the Amur leopard (already on the verge of extinction), and also harbors other endangered flora and fauna. The cold waters of the Barents Sea contain valuable fish stocks and the islands off Siberia’s Pacific coast are key breeding grounds for salmon.

The calculated destruction of the pristine habitats of Siberia and the Russian far north (the area in and around the Arctic Circle) dates to Soviet times, and the country has inherited a legacy of environmental degradation thanks to Soviet mismanagement. In the past, however, the high initial investments required in these regions, as well as steep transportation and maintenance costs, always put a break on full-throttle exploitation. This is now changing, as billions of dollars in foreign and domestic investment and government subsidies are poured into resource development. 

Sakhalin, an island off Siberia’s Pacific coast, contains huge newly discovered deposits of oil and gas. This discovery has triggered a flurry of economic activity, including some of the most ambitious projects in the history of the oil industry. Sakhalin Energy, an international consortium led by Royal Dutch Shell, is building offshore platforms, pipelines, and gas processing plants in the area. These activities are affecting the water quality of Sakhalin’s rivers, which are rich breeding grounds for salmon and an important source of food for the local people. Moreover, because the island lies in a highly seismically active zone, it’s not clear whether the oil rigs and pipelines can withstand recurring earthquakes. Even a single accident could spew millions of barrels of oil into the ocean, exposing residents to serious health hazards and threatening species like the endangered western gray whale, of which only 100 or so remain in the wild.

Russia’s oil and gas industry is dominated by a handful of state-run monopolies. Flush with profits from their high-priced energy exports, companies like Gazprom and Transneft are rushing headlong into new projects. Transneft proposes to build the world’s longest pipeline to transport oil from fields in western and central Siberia to the Pacific coast. The proposed route passes through virgin taiga forests and virtually assures the extinction of the Amur leopard, of which only some 35 remain. The pipeline is also slated to skirt Lake Baikal, a UNESCO World Heritage Site, in clear violation of international law.

The Barents Sea, too, has witnessed heightened oil and gas activity in recent years. Plans are now under way to exploit the region’s significant untapped deposits. According to a report by the United Nations Environment Programme, developing the reserves on Russia’s Arctic shelf will result in a six-fold increase in oil and gas shipping by 2020, with a potential corresponding rise in oil spills. The effects of such accidents in the region are well documented: past spills have killed or damaged a wide variety of marine life and poisoned the delicate Arctic food chain, which ultimately supports top predators such as polar bears. In addition, the introduction of alien species in the ballast water of oil tankers is expected to cause serious disruptions to regional fish stocks.     

Today, there is some indication that the Russian government is more sensitive to environmental concerns than in the past. But given the nation’s declared goal of doubling GDP by 2010, and the world’s rapidly rising demand for energy resources, the environment may end up being sidelined. If this happens, the scale of ecological disaster in Russia could be huge, tragically befitting the vastness of its setting.

This story was produced by Eye on Earth, a joint project of the Worldwatch Institute and the blue moon fund. View the complete archive of Eye on Earth stories, or contact Staff Writer Alana Herro at aherro [AT] worldwatch [DOT] org with your questions, comments, and story ideas.