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Russia: Moscow's Oil Pipeline Plan To China Stalls

Plans for a Russian oil pipeline to China have stalled following objections to the risk for sensitive areas near Lake Baikal. The problem is one of many that have slowed energy cooperation between the two neighbors, but it may also reflect the rising concern for the environment in Russia as the country promotes its energy exports.

Boston, 10 December 2002 (RFE/RL) -- Russia's first pipeline project to pump Siberian oil to China suffered a setback last week when the plan was rejected on environmental grounds.

On 4 December, the top environmental regulator of Russia's Natural Resources Ministry told reporters in Moscow that a study for a $1.7 billion pipeline from Angarsk in the Irkutsk region had been sent back for more work. Amirkhan Amirkhanov said the Russian oil company Yukos and the state pipeline monopoly Transneft will resubmit the plan for a 2,400-kilometer line to China's oil center of Daqing in mid-December, the Prime-TASS news agency said.

Amirkhanov cited concern that the pipeline, slated to carry up to 30 million tons of oil per year, would cross the Tunkinskii Park in the republic of Buryatia and other national nature preserves. The companies also failed to submit documents showing approvals from regional authorities, Amirkhanov said, according to Russia's RBC business news service.

The plan has raised concerns for nearby Lake Baikal, the world's deepest lake, with one-fifth of all the fresh water on earth. quoted Vladimir Belogolovov of the Buryatia regional association for Lake Baikal as saying that Yukos has proposed three alternate routes. Two cut through Tunkinskii Park. The third would run 20 kilometers from Baikal so that oil could reach the lake within 30 minutes in the event of a spill, he said.

Environmental groups are pressing Yukos to avoid the area by building the pipeline to the north of Lake Baikal, but the detour would raise the project's price by at least 50 percent, said. The project is already suffering from higher costs due to China's insistence on skirting Mongolia for security reasons, a choice that adds 170 kilometers to the route.

Although the Natural Resources Ministry seems to have taken a stand on pipeline safeguards, other government attitudes are unclear. Last week, the official Russian news agency RIA-Novosti reported that the draft pipeline plans had been sent back "to be streamlined," without explaining the issues.

Amirkhanov's announcement came one day after President Vladimir Putin's trip last week to Beijing, apparently to avoid bad news at the summit. Although the pipeline has been the subject of accords since 1999, neither Putin nor President Jiang Zemin mentioned it directly during the visit.

Despite earlier predictions that a deal for the project would be reached at the summit, "The Wall Street Journal" quoted an official from China National Petroleum Corporation as saying that no contract will be signed "in the near term." The official cited difficulties in negotiating with Russia and unresolved issues related to drilling, financing and the size of oil reserves. Pipeline construction was scheduled to start next summer but may be delayed.

Trust still seems to be one of several problems on both sides of the border. A huge gas pipeline project from the Irkutsk region to China faces similar delays. The role of Transneft has also posed a continuing challenge. The monopoly has persisted in promoting rival plans for the Siberian oil. It prefers to build a more costly pipeline to the eastern port of Nakhodka to reach other markets, rather than relying on China.

But the environment may also be emerging as a larger issue throughout the region as it tries to increase energy exports in all directions at once.

Earlier this month in the Caucasus, the U.S-backed Baku-Tbilisi-Ceyhan pipeline from the Caspian to the Mediterranean Sea survived a similar environmental challenge after Georgia approved a route that runs 15 kilometers from the Borjomi Gorge, a valued source of mineral water. Developers appear to have prevailed, in part, by promising to use pipe nearly 20 millimeters thick. The project is due to start in the spring.

Elsewhere, Spain is still struggling to contain the damage from last month's sinking of the 26-year-old "Prestige" tanker off its coast with 77,000 tons of heavy Russian oil. On 8 December, Madrid said it feared that the spill could turn into a "Spanish Chornobyl," the London-based "Financial Times" reported. Several European countries have since banned single-hulled tankers from their waters, raising the cost of reaching Western markets.

Turkey's new navigation rules in the crowded Bosporus this year have also slowed oil traffic, particularly from Russia and Kazakhstan, raising the pressure for Baku-Tbilisi-Ceyhan. Ironically, the overland route that Turkey has promoted as an improvement has faced its own environmental concerns.

But the resistance to pipeline plans in Irkutsk comes from within Russia itself, perhaps signaling that the country's environmental movement will play a more critical role. The coming months may prove whether the drive for energy exports is more powerful or whether Russia will pay more to promote exports and the environment at the same time.