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Russia: Public Debate and the Petroleum Sector

Authors:
  • Primakov Institute of World Economy and International Relations; ENERPO Center of the European University at St.Petersburg

Abstract and Figures

In Russia, civil society engagement with the petroleum sector is surprisingly rich and varied for a country that is ranked low on most democracy-related indicators. This chapter finds that there is a lively and varied public debate, with business associations, research institutes, independent experts, indigenous organizations and the few surviving independent media actively and often competently analysing and commenting on a broad range of issues related to the oil and gas sector. Russians were early users of social media, which occasionally also function as a platform for discussion of petroleum-policy issues. However, the real impact of civil society on decision-making and policy formulation in the petroleum sector is not as great as the diversity of actors and discussion might imply. One key reason is the tight government control over mainstream media outlets. The situation for free speech and civil society worsened steadily from around 2004 to 2016. As in neighbouring Kazakhstan, the Russian population puts a high premium on stability over freedom. While a central concern in this book is whether the media and civil society have any influence on the petroleum sector, in Russia the paradoxical situation is that the relationship is often reversed: the gas company Gazprom, rather than another organizational vehicle, is used by the government to control key mass media, and the oil company Yukos played a central role in promoting civil society until its main owner Mikhail Khodorkovsky was arrested and the company was carved up.
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© e Author(s) 2018
I. Overland (ed.), Public Brainpower,
https://doi.org/10.1007/978-3-319-60627-9_15
15
Russia: Public Debate andthe
Petroleum Sector
NinaPoussenkova andIndraOverland
Introduction
Russia is the world’s largest oil and gas exporter and has a petroleum his-
tory going back to the country’s rst oil well and renery in the town of
Ukhta in the Komi Republic in 1745. For a country that is ranked rela-
tively low on most indices of democracy, the involvement of Russian civil
society in the petroleum sector has been surprisingly diverse and active in
the post-Soviet period. However, civil societys actualinuence is limited
and declining.
N. Poussenkova (*)
Institute for World Economy and International Relations,
Russian Academy of Sciences, Moscow, Russia
I. Overland
Head of the Energy Programme, Norwegian Institute of International
Aairs (NUPI), Oslo, Norway
262
In this chapter, we provide an empirical overview of the evolution of
civil society engagement in the country’s petroleum sector from the dis-
solution of the Soviet Union in 1991 up to 2017. We start by looking at
it periodically—rst the 1990s and then the 2000s—and subsequently
examine the roles of specic types of actors: political parties, industry
associations, non-governmental organizations (NGOs), indigenous
groups, various media and the general public.
The 1990s
e 1990s were a period of dramatic social, economic and political
upheaval in Russia, with the dissolution of the Soviet Union, a weaken-
ing state and the rise of gangster capitalism and strong oligarchs. Oil
prices were low, Russian oil production was declining rapidly, privatiza-
tion of the oil industry was underway and the state company Rosneft was
in decline. During these years, big business and oligarchs determined the
rules of the game in the petroleum sector. Practically all key energy-policy
decisions were heavily lobbied by corporate actors keen to carve out
wealth for themselves from Soviet oil and gas assets.
us, post-Soviet market reforms in the oil sector—including the infa-
mous loans-for-shares scheme whereby major Russian companies were
handed over to insiders via rigged auctions—were generally initiated by
oilmen. Gazprom was founded on the basis of the Soviet Ministry of the
Gas Industry in 1989. e next major transformation of the petroleum
sector came with Presidential Decree 1403, which created the private oil
companies LUKOIL, Yukos and Surgutneftegas, as well as the state com-
panies Rosneft, Transneft and Transnefteprodukt (Russian President
1992). e new companies were established largely in line with the inter-
ests of the powerful individuals who became their presidents. For exam-
ple, Vagit Alekperov, a former First Deputy Oil Minister, due to his
political connections, could hand-pick attractive assets for LUKOIL.In
1994–1995, Slavneft, SIDANCO, Sibneft and TNK were established on
the basis of assets from the state-owned oil company Rosneft; conse-
quently, Rosneft shrank rapidly. e unexpected creation of the oil
N. Poussenkova and I. Overland
263
company Sibneft by a special Presidential Decree on 24 August 1995
posed a further challenge to Rosneft (Poussenkova 2007).
In the 1990s, the oilmen had a powerful lobby in the State Duma: this
was the New Regional Policy Party headed by the chairman of the Union
of Oil Industrialists, Vladimir Medvedev. In 1994, the Interregional
Association of Economic Interaction was formed in the Federation
Council, led by Senator Yuri Shafranik, then Minister of Fuel and Energy.
Big business also made active use of the mass media under its control to
pursue its own goals: LUKOIL owned 41% of the newspaper Izvestia,
UNEXIM owned 20% of the newspaper Komsomolskaya pravda and
cooperated closely with the magazine Expert, SBS-Agro was connected
with the Kommersant publishing house and MENATEP had close rela-
tions with the Moscow Times (Poussenkova 2011).
e 1990s were also a period when real political opposition existed, as
the 1995 State Duma elections and the 1996 presidential elections dem-
onstrated. In December 1995, the Communist Party became the largest
party in the Duma with 22% of the vote, whereas President Yeltin’s party,
Our Home, received only 10%. Yeltsin’s popularity had also evaporated,
mainly because of the failure of economic reforms, the war in Chechnya
and corruption. His presidential election campaign was conducted under
the slogan ‘vote or lose’, with full control over television and with the
support of oligarchs such as Boris Berezovsky, Vladimir Gusinsky,
Vladimir Potanin, Mikhail Fridman and Mikhail Khodorkovsky. It is
noteworthy that Gazprom was used to help Yeltsin win the elections: in
1996, the gas monopoly borrowed 40 trillion roubles, which the govern-
ment spent on paying pensions arrears (Popov 2007).
During the 1990s, the opposition parties had some impact on the
development of the petroleum sector in Russia. For example, the Yabloko
party was fairly active on oil and gas issues, especially in promoting
production- sharing agreements as a way of attracting foreign investment
to the sector. In 2003, when it became clear that oil prices were growing
steadily, Yabloko leader Grigory Yavlinsky proposed the creation of the
Stabilization Fund (Yabloko 2016). Later, however, Yabloko became
gradually marginalized in politics, due to repressive measures and declin-
ing popularity.
15 Russia: Public Debate andthePetroleum Sector
264
ough Soviet science collapsed during the 1990s, this period also saw
many academics achieve high-level positions in government. A key driver
and ideologue of economic reform in Russia was Egor Gaidar, an aca-
demic with a PhD in economics, who initiated privatization and man-
aged the process of transition to a market economy. Academician Evgeniy
Primakov was Chairman of the Government in 1998–1999. Academics
were particularly well-represented in the Ministry of Fuel and Energy:
Vladimir Lopukhin served as Minister 1991–1993, Andrei Konoplyanik
as Deputy Minister 1991–1993 and Elena Telegina as Deputy Minister
1997–1999.
e 1990s were a period when glasnost began to inuence the petro-
leum sector, especially in connection with environmental essues. When
there was a large oil spill from an old pipeline in the Komi Republic in
1994, top managers of the company responsible, Komineft, managed to
hush up the catastrophe for more than a month, in keeping with the
Soviet tradition of secrecy. However, when information inevitably reached
the public, Russian and international media provided extensive coverage
of the accident, and environmental NGOs such as Greenpeace actively
supported the protests of the local population (Energy Future 2010;
Neftyanka 2015).
During the 1990s, there was a trend towards decentralization in Russia.
Regional authorities exerted considerable inuence on the development
of the oil and gas sector in their regions, largely through the ‘two-keys’
principle: the use of subsurface resources was the joint responsibility of
the federal centre and the regions, and the centre and the regions had
equal rights (Article 72 of the Russian Constitution). In February 1994,
a treaty was signed between the Republic of Tatarstan and Russia on the
delimitation of competences and delegation of authority, and special
agreements were concluded on the oil sector. During the 1990s, the gov-
ernment of Tatarstan pursued an energy policy that was relatively inde-
pendent of Moscow and that provided signicant scal benets to
Tatneft. As a result, the company, with its mature elds, managed to halt
the oil production decline, maintaining output at some 24 million tons
per year.
To sum up, the ‘roaring 1990s’ in Russia was a period of social and
economic dissolution, decentralization and diversication. e emergent
N. Poussenkova and I. Overland
265
civil society had some impact on the development of the country’s petro-
leum sector—but far more inuential were various powerful business
people and politicians operating within the petroleum sector.
The 2000s
From the year 2000 onwards, oil prices rose, crude production began to
rise again and life in Russia started stabilizing. is was a period of
increasingly authoritarian capitalism and a strengthening state, with fur-
ther consolidation of the petroleum sector, its creeping renationalization
and a renaissance for Rosneft, which started to compete with Gazprom
on many fronts (Lunden etal. 2013). Simultaneously, the state tightened
its grip on the mass media, freedom of the press was suppressed, liberals
were squeezed out of central positions, the opposition was persecuted,
strict limitations were placed on NGOs and international oil companies
had to cope with rising resource nationalism (on the media, see Jackson
2016, 354).
Vladimir Putin’s rst presidential term, 2000–2004, was a transition
period when a new energy policy was not yet fully formulated. Steps were
taken to further liberalize the energy sector: privatization of the oil and
coal industry continued, and a programme of market reforms in power
generation was approved. However, the government simultaneously
increased its inuence in the petroleum sector. It banned private pipe-
lines, strengthened state control over Gazprom and postponed reform of
the gas export monopoly (Milov and Selivakhin 2005; Overland 2017).
During Putin’s second term in oce, the attitude of the authorities
towards the petroleum sector changed abruptly. After the cabinet of
Mikhail Kasyanov resigned in 2004, its successor, the government of
Mikhail Fradkov, ceded the initiative on key policy decisions in the
energy sector to the President and his administration. e state started
intervening far more actively in the oil and gas industry. e fourth State
Duma, elected in December 2003, also contrasted starkly with the third
State Duma. e new, strong pro-presidential majority made possible the
swift passing of legislation. ere were still numerous oilmen in the
Duma, but they started complying with presidential policy.
15 Russia: Public Debate andthePetroleum Sector
266
e political inuence of the oligarchs and heads of petroleum-rich
federation subjects subsided. Seeking to deprive the oil and regional bar-
ons of their sources of economic power, in August 2004 the State Duma
adopted amendments to the Law on Subsurface Resources that abolished
the ‘two-keys’ principle. Moscow took control of licensing: decisions on
issuing licenses were now to be made by a federal commission, and the
regions were left with only an advisory role in the tenders (Chernobylets
and Shadrina 2006).
e power of the once-mighty private oil companies also waned. In
the early 2000s, Yukos had been the largest Russian oil company and a
trailblazer in many areas. For example, Mikhail Khodorkovsky initiated
important pipeline projects that could have signicantly expanded
Russia’s export potential, in addition to giving Yukos better access to for-
eign markets. Of particular importance was the Murmansk oil pipeline
planned by Yukos, Sibneft, LUKOIL, TNK and Surgutneftegas in 2003
(Moe etal. 2011; Overland and Krivorotov 2015).
is unprecedented promotion of private pipelines in Russia and the
role of Yukos had posed a serious challenge to the state oil pipeline com-
pany, Transneft. It may also have angered the political authorities, since
export pipelines in Russia had always been seen as not only transporta-
tion infrastructure but also powerful instruments of government energy
policy (Orttung and Overland 2011). Mikhail Kasyanov, then Prime
Minister, declared that there would be no private pipelines in Russia
(Ignatova 2003). And in 2003 the Yukos case started: rst Platon Lebedev
and then Mikhail Khodorkovsky were arrested, and the destruction of
the previously mighty company commenced, aided and abetted by
Rosneft (Leonard 2016). e Yukos case marked the end of the Russia of
the 1990s and the entrenchment of the new Russia of Vladimir Putin.
Whereas the inuence of private oil companies was in decline, the lob-
bying power of the state companies was on the rise. Gazprom and Rosneft
became national champions: it was expected that these companies, by
virtue of their vast hydrocarbon reserves and administrative resources,
would be able to compete with the global oil majors, protect the national
hydrocarbons resources and implement the desired energy policy. ese
state companies in turn lobbied for changes in the scal legislation, in
order to ensure an attractive tax regime for their projects and ultimately
N. Poussenkova and I. Overland
267
the exclusion of all other companies from Russia’s continental shelf and
the Arctic (Overland 2010; Overland etal. 2013).
In the current Russian context, big business remains the most power-
ful player by far. However, in addition, there are several types of
non- governmental actors that might inuence oil and gas policy: profes-
sional organizations and associations, small and medium-sized oil and gas
companies, the political opposition, researchers and think-tanks, NGOs,
including environmental and indigenous rights groups, the media, insti-
tutions of higher education and the general population. eir roles are
discussed in the following sections.
Business Associations
e Russian Union of Industrialists and Entrepreneurs (RSPP) promotes
the interests of the Russian business community, bringing together more
than 100 sectoral and regional associations. RSPP consists of several
committees, including the Committee on Energy and Energy Eciency.
is committee is headed by Vagit Alekperov, president of Russia’s largest
private oil company, LUKOIL, and is therefore inuential. It is clear
from the list of individuals whose views on energy issues were posted on
the committee’s website in 2016 that it is very much a pro-establishment
organization (RSPP 2016).
e Chamber of Trade and Industry (TPP) is a non-governmental,
non-commercial organization that represents the interests of small,
medium-sized and big businesses, embracing all spheres of entrepreneur-
ship (TPP 2016). For a long time, the TPP’s high status and inuence
was linked to its president, Evgeniy Primakov, a popular Russian politi-
cian who headed the organization from 2001 to 2011. His successor,
Sergei Katyrin, is a lower-prole gure, and under him TPP has lost some
of its clout. Recent legislative proposals put forth by TPP concerning the
petroleum sector include draft amendments to the Law on Subsurface
Resources, the draft law On Organizing an Experiment of Gas Sales at
Market Prices on Commodity Exchanges, an initiative for a resource base
of the oil and gas complex of Russia and problems of subsurface use and
a concept for state management of rational use of oil reserves.
15 Russia: Public Debate andthePetroleum Sector
268
In addition to these general trade organizations, there are several others
specic to the petroleum sector: the Russian Gas Society (RGO), a
‘pocket’ organization of Gazprom, the Union of Oil and Gas Industrialists
of Russia and the Association of Independent Oil and Gas Producers
(AssoNeft), which seeks to protect the interests of small and mid-size
nonintegrated oil companies (without much success). e most inuen-
tial of these organizations is the Russian Gas Society, which actively pro-
motes the interests of Gazprom, through its President, Pavel Zavalniy,
who also chairs the Committee on Energy of the State Duma. In addi-
tion, RGO develops relevant legislation, rules and standards, provides
advisory services and acts as an arbitration court.
The Political Opposition
After the year 2000, because of the increasingly strict limitations in elec-
tion legislation and the tightening of state control over the main media,
television in particular, a new form of opposition dubbed the ‘non-
systemic’ opposition emerged but was eectively denied access to elec-
tions. It came to include left-wing forces, right-wing forces and
nationalists. In addition, there is what is known as the ‘systemic opposi-
tion’, consisting mainly of the Communist Party, the Liberal Democratic
Party (LDPR) and A Just Russia. It is represented in the State Duma and
the regional authorities and in practice cooperates with the
government.
e nonsystemic opposition suers from serious government repres-
sion, in the form of denial of registration by the Ministry of Justice and
other legal-bureaucratic obstacles and censorship in key mass media,
especially the national television channels (Gilbert 2016, 1553). It has
only limited inuence on how petroleum resources are managed, and its
actions aimed at the powerful state oil and gas companies seem doomed
to failure.
An important opposition gure is Alexei Navalny, who has proled
himself as an anti-corruption crusader. A considerable part of his activity
has targeted the petroleum sector. In 2008, Navalny bought a symbolic
N. Poussenkova and I. Overland
269
number of shares in Gazprom, Gazprom Neft, LUKOIL, Rosneft and
Surgutneftegas, thus becoming a minority shareholder. e idea was to
exert pressure on the companies over issues of non-transparency and cor-
ruption. In 2010, he published secret documents about the auditing of
Transneft, indicating that approximately 4 billion dollars had been
embezzled by Transneft’s leaders during the construction of the Eastern
Siberia–Pacic Ocean oil pipeline (ESPO). Navalny also tried to identify
where Transneft was channelling its outsized charitable allocations; how-
ever, the Oce of Economic Crimes refused to start criminal proceedings
because Transneft did not respond to the queries of the police (Malkova
2010). Alexei Navalny has been subjected to signicant pressure from the
authorities, including being indicted and convicted of corruption, put
under house arrest, and his brother Oleg Navalny being sentenced to
several years in prison.
Opposition experts and politicians often present their views to the
public by writing analytical reviews about the situation in the country,
including its energy sector. Vladimir Milov and Boris Nemtsov published
a book in which they tried to determine what 10 years of Putin’s rule had
meant for Russia (Milov and Nemtsov 2010). e chapter ‘Russia: Raw
Materials Appendage’ analysed the problems created by Russia’s oil and
gas dependency. ere the authors argued that the dependency of Russia
on its hydrocarbon reserves increased during Putin’s rule; that despite the
unprecedentedly high oil prices, the Russian economy grew more slowly
than it could have; moreover, that no real eorts were made to modernize
the country; assets were expropriated and more and more was spent on
the growing state apparatus, the special services and on nancing state
corporations.
Equally interesting is Putin and Gazprom, also authored by Milov
and Nemtsov (2008). Here they describe Gazprom as Putin’s main
personal project, emphasizing that the reliability of the Russian gas
supply is deteriorating. ey focus on shady deals involving stripping
of assets from Gazprom, including purchases of assets and pipeline
construction. is extract from Putin and Gazprom says much about
the weakness of civil society in Russia in the absence of real freedom
of the press:
15 Russia: Public Debate andthePetroleum Sector
270
While in the late 1990s actions related to the stripping of assets [from
Gazprom] became known by the public … and were commented on exten-
sively by independent mass media, during the second term of Putin’s presi-
dency, given the increasing suppression of freedom of press, the public was
not well aware of the second wave of asset stripping. e business press that
is not controlled by Putin wrote about it, but its circulation is too small,
and the audience is too narrow for this information to receive a broad
dissemination. Russian TV is silent about such deals– for obvious reasons.
(Milov and Nemtsov 2008)
However, the liberal and democratic opposition in Russia appeals to
only a small segment of the population. e works by Milov and Nemtsov
are popular mainly among the intelligentsia and people with higher edu-
cation. Vladimir Milov has written critical columns for the newspaper
Vedomosti, also reaching a limited number of readers. On Facebook, his
postings continue to attract much attention and commentary, but again
the audience is small. Perhaps Milov’s greatest weakness is that he is good
at formulating criticism, but does not always have constructive alterna-
tives to propose.
Boris Nemtsov was shot and killed in 2015 while walking near the
Kremlin (Sergeev etal. 2015). Nemtsovs fate is illustrative of the trajec-
tory of independent voices in Russian petroleum-policy formulation: he
went from Deputy Prime Minister with special responsibility for energy
issues under President Yeltsin in the 1990s to being a member of the
opposition who spoke out loud and clear on energy issues and was then
assassinated in 2015.
e political opposition also includes other liberals who were displaced
from the establishment, such as Andrei Illarionov, who was economic
advisor to the President from2000 to 2005. In this position, he often
criticized the activities of the authorities but without much eect. For
example, he advised the authorities to leave the Yukos oil company
alone—only to see it dismantled. On 27 December 2005, Illarionov
resigned, stating that a change of political regime had taken place in
Russia during Putin’s rule, and he, even being advisor to the President,
could no longer freely express his opinion (Lenta.ru 2016). He continued
to express his critical opinion as part of the opposition.
N. Poussenkova and I. Overland
271
Another example is the former Minister of Finance Alexei Kudrin,
who left the government after a spat with Prime Minister Dmitry
Medvedev and has consistently argued for the government to rein in its
spending of oil and gas revenues (and not to use the National Wealth
Fund for nancing oil and gas projects). As an old associate of President
Vladimir Putin who has chosen to stand outside the government, Kudrin
represents a position between the opposition and the government.
Environmental NGOs
Several environmental NGOs operate in Russia, also in the petroleum
sector. ey are sometimes regarded with suspicion by the establishment,
because they are thought to be acting in the interest of foreign countries,
seeking to undermine the competitiveness of Russian business by insist-
ing on strict environmental standards (for further discussion, see Lee
et al. 2012). eir existence became increasingly precarious after the
adoption in 2006 of a new law on NGOs and again with amendments in
2012 to the Law on Non-Commercial Organizations (Crotty etal. 2014).
Under these amendments, Russian non-commercial organizations that
receive funding from abroad and are involved in political activities are
classied as ‘foreign agents’ (Gosudarstvennaya Duma 2012).
WWF Russia is an inuential environmental NGO in Russia. Part of
its success may lie in its approach, which involves seeking constructive
cooperation with companies, rather than confrontation. WWF Russia is
particularly active in the petroleum sector, where it aims to reduce the
negative impacts of the oil and gas industry. Owing to the eorts of
WWF Russia, Sakhalin Environment, Western Grey Whale Advisory
Panel and other organizations, seismic activities in the framework of
Sakhalin-1 project that could have destroyed the grey whales of the
Western-Pacic group were halted.
In 2007, when over 4000 tons of fuel oil were spilled in connection
with an accident in the Kerch Strait between the Black Sea and the Sea of
Azov, WWF Russia began to focus on oil spills. For the rst time in
Russia, WWF organized activities to rescue oil-covered birds. WWF
Russia jointly with other environmental organizations interacts with the
15 Russia: Public Debate andthePetroleum Sector
272
legislative and executive authorities in order to improve legislation con-
cerning oil spills. On 28 November 2007, WWF Russia together with
Greenpeace, the Union for Protection of Birds of Russia, Environmental
Watch of Sakhalin, Friends of Siberian Forests, Centre of Environmental
Education of the Sakha Republic and other organizations submitted an
appeal ‘No to New Oil Spills in Russia’ to the State Duma, the Federation
Council and the government, insisting on urgent measures to solve the
problem, including development of the law ‘On the Protection of the
Seas from Oil Pollution’. e concept of the law was formulated in 2009
on the initiative of WWF Russia. A draft law was developed on the basis
of this concept, approved by the Duma and signed by the President; it
entered into eect on 1 July 2013 (WWF 2016).
The East Siberia–Pacific Ocean Pipeline
Another example of a petroleum project where environmental NGOs
and civil society groups were able to exert inuence is the rerouting of the
East Siberia–Pacic Ocean Pipeline (ESPO), so that it would bypass
Lake Baikal. On 31 December 2004, Prime Minister Mikhail Fradkov
signed a decree on the construction of ESPO from Taishet to Skovorodino
to Perevoznaya Bay. Initially, the state oil pipeline company Transneft
planned to lay the pipeline some 800 metres from the northern shores of
Lake Baikal in a seismically active zone with earthquakes reaching 10
degrees on the Richter Scale. Environmental NGOs, including WWF
Russia, Baikal Environmental Wave, Greenpeace and Friends of the
Earth, protested loudly, pointing out that the proposed pipeline would
pass through permafrost areas, regions with complicated geographic,
geological and hydrological features and cross the main rivers of the
Baikal basin. ousands of people signed a letter to Vladimir Putin
drafted by WWF Russia, requesting his help in protecting Lake Baikal
from ESPO.
Scientists joined forces with the environmental NGOs. ey protested
against Transneft’s plan to make Perevoznaya Bay the endpoint of the
pipeline, where it would threaten two nature reserves, the habitat of the
Far-Eastern leopard, as well as thesheries of Primorsk Krai. e State
N. Poussenkova and I. Overland
273
Environmental Expert Review twice rejected the proposed pipeline route,
which, as noted, would pass some 800 metres north of Baikal. Transneft
retorted that moving the route further north would be too expensive, as
it would then pass through uninhabited mountain areas. However, in
April 2006, Vladimir Putin met with scientists in the Siberian city of
Tomsk, listened to the proposals of Nikolai Laverov, vice president of the
Russian Academy of Sciences, and then ordered Transneft to move ESPO
from the shores of Baikal at least 40km further north. Ultimately, the
pipeline was built 400km to the north of Baikal.
In this case, the normally politically passive Russians were protesting
not against a top–down decision that aected their personal well-being
but against potential environmental damage, and their protest seemed to
make a dierence. Still, a nagging question remains unanswered: what
was it that really led Putin to decide to have the pipeline rerouted—the
environmental protests or the fact that the rerouted ESPO passed close to
the Irkutsk and Yakutsk oilelds of Rosneft, Surgutneftegas and TNK-BP,
which thus beneted from the decision to move the pipeline? Or did
Putin want to be remembered as the man who saved Baikal from the
irresponsible actions of the state oil pipeline company?
Another high-prole case where Russian and international environ-
mental NGOs did appear to have inuence during this period involved
the Sakhalin-2 project. Here it seems that the authorities allowed the
NGOs and indigenous peoples to win: their environmental criticism
aimed at Sakhalin Energy (then owned by Shell, Mitsubishi and Mitsui)
was used as a convenient pretext by the Russian government to enable
Gazprom to join the project as majority shareholder on favourable terms
(Overland 2011).
Indigenous Peoples
According to Russian legislation, indigenous peoples have a right to par-
ticipate in public hearings concerning new petroleum projects. But the
problems faced by the Russian Association of Indigenous People of the
North, Siberia and the Far East (RAIPON) from around 2010 onwards
show that their inuence is in practice limited.
15 Russia: Public Debate andthePetroleum Sector
274
RAIPON sought to inuence the petroleum industry in favour of the
indigenous peoples and openly discussed hot issues in the press and at
domestic and international events (Berezhkov 2012). In August 2012,
delegates from Komi, Nenets and Yamal-Nenets autonomous regions,
the Russian Sámi parliament and RAIPON attending the conference
Arctic Oil: Implications for Indigenous Peoples’ in Usinsk demanded
that oil production on the Arctic shelf be banned; a moratorium on
Arctic onshore oil drilling be introduced, and rights of indigenous peo-
ples for their land be recognized by law. One appeal was addressed to the
government of Russia, the second, to the global community (Greenpeace
Russia 2012). Was it a coincidence that on 1 November 2012, the
Ministry of Justice ordered RAIPON to halt its activity, claiming that its
charter did not comply with current legislation? For further discussion of
corporate social responsibility and citizens as stakeholders in Arctic oil
extraction in Russia, see Henry etal. (2016).
In March 2013, after prolonged legislative and public relations battles,
RAIPON’s charter was amended, and its problems ended for the time
being, thanks mainly to the support of the regional authorities and depu-
ties in the State Duma, primarily Grigoriy Ledkov, from the Yamal-
Nenetsk Autonomous Region. He stressed the importance of establishing
constructive dialogue with the indigenous peoples, particularly in view of
the planned development of the Arctic.
Think-Tanks, Experts andEducational
Institutions
Academic and analytical experts draft energy strategies for Russia, pro-
vide advice to the government, professional organizations and businesses,
carry out projects jointly with NGOs, are invited to write articles or make
comments for printed mass media or appear on TV or radio programmes
and they teach at institutions of higher education. ey have some inu-
ence, but the policymakers listen mainly to what they want to hear. ese
experts can be divided into the following groups: pro-Kremlin political
scientists (e.g. Konstantin Simonov, of the National Energy Security
Fund), government-aliated economists (e.g. Leonid Grigoriev of the
N. Poussenkova and I. Overland
275
government’s Analytical Center), those aliated with Gazprom or
Rosneft (e.g. Andrei Konoplyanik, Vladimir Feigin), moderates (e.g.
Tatiana Mitrova of the Institute of Energy Studies), technical (e.g. Igor
Bashmakov of the Center for Ecient Use of Energy), critical (e.g.
Mikhail Krutikhin of RusEnergy), oppositional (e.g. Vladimir Milov of
the Institute of Energy Policy) and neutral oil and gas analysts working
for Russian and foreign investment banks or auditing companies (e.g.
Valery Nesterov of Sberbank).
e Russian Academy of Sciences nds itself in a rather dicult situa-
tion now, when a new round of its reform is underway. However, some of
its institutes provide advisory services for clients in addition to basic
research and are developing dynamically, for example, the Energy
Research Institute.
Some institutes of the Academy of Sciences are respected domestically
and internationally. e Institute of World Economy and International
Relations (IMEMO) ranks 32nd in the world in the global rating of lead-
ing think-tanks (IMEMO 2015). One of the authors of this chapter
founded and now heads the IMEMO Oil and Gas Dialogue Forum,
which regularly holds energy seminars attended by representatives of
the ministries, domestic and foreign oil and gas companies, NGOs and
the expert community. Participants discuss major problems of the
Russian and global energy sector, opportunities and risks for Russia and
together search for ecient solutions. e forum is widely attended by
mid-level managers and experts from Gazprom, so it is possible that
some of the ideas discussed at these seminars inuence company
decision-making.
Despite the general decline of Russian science, there are petroleum
R&D institutes such as NIIgazekonomika, VNIPIgazdobycha, VNIPIneft
or TatNIPIneft that are supported by energy companies, and they appear
to be doing quite well. However, since they can be expected to serve their
corporate sponsors, their independence is limited.
A few small research centres and consulting companies focusing on the
oil and gas sector have been established, such as the Institute of Energy
and Finance (founded in 2004) or Vygon Consulting (founded in 2013).
ey conduct high-quality research on oil and gas issues and provide
advisory services to the government and oil companies.
15 Russia: Public Debate andthePetroleum Sector
276
Although these new centres ensure competition and diversity in the
scientic sphere, it is not always easy to determine whether they are
truly independent in their research and conclusions. For instance, the
Ministry of Energy has commissioned the Energy Strategy Institute
and the Institute of Energy Studies to draft Russia’s Energy Strategy
towards 2035. However, it appears that the Ministry of Energy will
approve and incorporate in the nal version only those ideas and calcu-
lations that it nds appropriate. e Institute of Energy and Finance is
currently involved in drafting the General Scheme of Oil Sector
Development towards 2035. e General Scheme is based on the fore-
cast of socio- economic development of Russia towards 2030 provided
by the Ministry of Economic Development, which predicts that the
average oil price in 2030 will be USD 93.7 per barrel (Belogorev 2015),
and the authors of the General Scheme are constrained by these
frameworks.
On the one hand, the involvement of these research institutes in draft-
ing such high-level papers appears to conrm their inuence on energy
developments in Russia. On the other hand, both the Strategy and the
General Scheme are general documents that will not necessarily be put
into practice. eir predecessors have never been fully implemented, and
their predictions have rarely come true. e institutes win the tenders for
drafting such key documents, which seems an appropriate way of involv-
ing experts in the process; however, the tender criteria are not always
transparent. For instance, in summer 2014 VNIIGAZ, the R&D insti-
tute of Gazprom won the tender for drafting the General Scheme of Gas
Sector Development up to 2035. is Gazprom subsidiary is likely to
formulate the document in such a way as to be in line with the interests
of the gas export monopoly.
In general, the inuence of these research institutes and think-tanks
depends on the personality and connections of their leadership, the qual-
ity of their research—and, importantly, on whether their conclusions and
recommendations are palatable to the authorities.
Russian educational establishments can have some inuence on the
petroleum sector, since they train future managers and employees who
will work either directly in the energy sector or in relevant ministries and
organizations that deal with management of petroleum resources and
N. Poussenkova and I. Overland
277
revenues. In addition to teaching, they often conduct research, so they
can have additional impact through the formulation of recommenda-
tions for relevant authorities or companies. e inuence of educational
establishments varies widely, depending on the status of their leadership,
the composition of their Boards of Trustees, the quality of teaching and
research and so on. e most inuential educational establishments
focused on the petroleum sector are the Gubkin Oil and Gas Academy
and Tyumen Oil and Gas University. Of particular importance is the St.
Petersburg Mining University, where both President Putin and Rosneft
President Igor Sechin completed their PhD (kandidatskaya) degrees.
High-impact general establishments that deal extensively with petroleum
issues include the Higher School of Economics, the Presidential Academy
of National Economy and Public Administration and the Moscow State
Institute of International Relations (MGIMO).
Mass Media
e media, and television in particular, wield considerable inuence, but
from the year 2000 onwards, most Russian media have become instru-
ments for shaping the kind of public opinion desired by the government
and not agents in their own right (Heritage 2015). e Kremlin has
increasingly taken direct control of key mass media—for example, the
First Channel, Russia’s largest television channel, which reaches 98.8% of
the population. In many cases, media have come under the control of
Gazprom or other state-controlled companies. Gazprombank owns
Gazprom-Media, which was established in 1998. It reaches audiences of
altogether 90 million people through various types of media (see
Table15.1).
Because a few independent critical mass media still exist, the Kremlin
can refute claims that there is no freedom of the press in Russia. ese
media also provide outlets for the opposition to let o steam. Editors of
independent mass media rarely experience direct pressure from the
authorities, but the Kremlin has nancial (through impact on advertisers
and sponsors), legislative and judicial levers. e number of independent
media is also gradually shrinking.
15 Russia: Public Debate andthePetroleum Sector
278
Certain TV channels that are to varying degrees independent oer
coverage of petroleum issues.
eRBC TV Channel discusses important oil and gas sector issues
in a professional way. For example, one of its guests in 2016 was
Vladimir Feigin, President of the Institute for Energy and Finance,
who participated in the programme, ‘State Support of the Oil and
Gas Sector: Is it Needed or Not?’ Low oil prices in 2014–2016 (and
the implications for the petroleum sector and the Russian economy in
general) was a hot media topic, and RBC broadcasts the programme
‘Oil Companies have Calculated a Stress-Scenario below the Price of
USD 30 for 2016: Oil Production Will not Suer, but the State
Budget will Have a Short-Fall of USD 50 Bln’ (Pobedova 2015). In
January 2016, RBC anchorman Igor Vittel hosted a programme
where the First Deputy Minister of Energy Alexei Teksler and Grigoriy
Vygon, head of Vygon Consulting, discussed the dependence of
Russian gasoline prices on world oil prices, the cost of aviation kero-
sene, and what the sector should expect with oil at USD 20 per barrel.
However, in May 2016 the three main editors at RBC resigned, citing
political pressure (Boleckaya 2016). is may have signalled the
beginning of the end of RBC’s independence.
e television channel Dozhd, founded in 2010, is a 24-hour Russian
news TV channel and media holding that provides news, analytical
content and debates. It has given broad coverage to many controversial
Table 15.1 Media managed by Gazprom-Media
Television channels Radio stations Other
NTV Avtoradio Seven Days publishing house
TNT Energy Tribune newspaper
TV-3 Humor FM Panorama TV guide
Friday! Radio Romantika NTV+ satellite operator
2X2 Comedy Radio Rutube video hosting
35 other TV channels Like FM now.ru online cinema
Relax FM Central Partnership
Children’s Radio NTV-Cinema
Echo of Moscow Comedy Club
101.ru
Source: Gazprombank 2016
N. Poussenkova and I. Overland
279
issues, such as the 2011–2013 protest movement in Moscow and other
major Russian cities against the Russian government, and the political
protest punk group Pussy Riot. e channel invites the Kremlin’s per-
sona non grata, such as former Yukos owner Mikhail Khodorkovsky, to
speak on its shows. Consequently, the channel is regularly criticized
and inspected by regulators and law enforcement bodies. Dozhd expe-
rienced serious nancial problems when advertisers left the channel
under pressure from the Kremlin and is now able to make broadcasts
via the internet only.
Dozhd provides extensive coverage of oil and gas issues. A notable
example was the roundtable organized on 17 October 2014, advertised as
‘Mother Oil: Who caused the oil price drop, how much it will cost Putin,
and are Kudrin and Leontiev right when they say that the price of oil is
falling because of a global conspiracy?’ e discussion centred on why the
price of oil is falling, what prices level the Russian economy could bear
and whether cheap oil will change Russia’s foreign policy. Invited guests
were Mikhail Krutikhin from RusEnergy, Lev Snykov, partner of
Greenwich Capital, Marcel Salikhov from the Institute of Energy and
Finance, Alexei Knizhnikov from WWF Russia, Mikhail Kasyanov,
cochairman of RPR-PARNAS and Dmitriy Lyutyagin, independent oil
and gas expert.
e radio station Echo of Moscow is highly popular and sometimes
politically controversial. Its target audience is well-o, educated
Muscovites, in the 40+ age bracket. Interestingly, 66% of its shares are
held by Gazprom-Media, with the remainder divided among the jour-
nalists of the station. Its Board of Directors includes four directors from
Gazprom, three directors from within Echo of Moscow and two inde-
pendent directors. Some experts believe that this popular radio station is
the only independent mass media outlet in Russia and that its line is
determined solely by its editor-in-chief (Business Online 2014).
However, others disagree: the well-known journalist Vladimir Pozner has
stated that ‘there are almost no independent mass media remaining in
Russia, and Echo of Moscow is only a pseudo-independent channel
(because 66% of the channel is owned by Gazprom-Media)’ (Rustamova
2015).
15 Russia: Public Debate andthePetroleum Sector
280
Newspapers
Newspapers have much less impact on public opinion than television in
Russia but nonetheless provide important platforms for interaction and
discussion among journalists, experts and elites. One of the most impor-
tant broadsheets for the Russian petroleum sector is Vedomosti, a daily
business newspaper launched in 1999 by the Dutch journalist Derk
Sauer, currently with a print circulation of 75,000. In 2013, it had 26.8
thousand subscribers, including 4.9 thousand corporate subscribers.
Until 2015, the newspaper was published by Sanoma Independent Media
jointly with e Financial Times and e Wall Street Journal, each owner
holding a 33% stake. However, in the autumn of 2014, a law was adopted
that had been put forward by several Duma deputies, prohibiting
foreigners from owning more than 20% of any Russian mass media out-
let; the law entered into force on 1 January 2016. As a result, the foreign
owners sold their shares to Demyan Kudryavtsev, the former Director
General of the newspaper Kommersant. e fate of Vedomosti exemplies
the barring of previously important foreign inuence in Russia.
Vedomosti covers the petroleum sector in its section ‘Energy Resources’.
It regularly quotes such high-prole moderate and neutral experts as
Tatiana Mitrova, Maria Belova and Valery Nesterov. It has provided space
both for pro-Kremlin energy experts, such as Konstantin Simonov, and
for members of the opposition, such as Vladimir Milov. Also, Mikhail
Khodorkovsky’s articles and interviews have been published in Vedomosti.
Two other important newspapers that often write on petroleum-sector
issues are Kommersant (circulation of paper edition: 125,000) and
Nezavisimaya gazeta (circulation of paper edition: 40,000). e latter has
a supplement titled NG-Energy that brings well-informed articles on oil
and gas issues written by a broad range of experts, from pro-Kremlin to
opposition.
In addition to the newspapers, there are some magazines that cover the
petroleum sector. e two best-known are Neft i kapital (paper edition
circulation: 12,000) and Neftegazovaya vertikal (paper edition circula-
tion: 15,000). ey provide solid expert coverage of most key problems
in the sector and quote a wide range of experts.
N. Poussenkova and I. Overland
281
Finally, the Russian population is highly active on social networks
(Reuter and Szakonyi 2015), with the home-grown companies V kon-
takte, Odnoklassniki and Moi mir all larger than Facebook, which is also
popular. e platforms provide obvious channels for public debate but
have also come under scrutiny and pressure from the authorities (Pallin
2017, 16; Pearce 2015). Russian actors sometimes also use more special-
ized petition websites such as democrator.ru and change.ru. Some energy
experts have started posting their views and analysis on social media, and
sometimes they also generate discussion. However, so far they do not
appear to have much impact on government policy.
The General Population
Ordinary Russians have little impact on how the country’s petroleum
reserves are managed. Indeed, they generally have no real interest in or
understanding of the sector: of much greater personal importance to
them is the distribution of oil and gas wealth. Many Russians are against
heavy foreign involvement in the energy sector; they tend to see oil and
gas as natural government monopolies, believe it was wrong to privatize
the industry and feel that gas and petrol prices should be lower (Overland
and Kutschera 2011).
Ordinary Russians, particularly those living in the oil- and gas-
producing parts of the country, can try to inuence developments by
participating in public hearings held by oil and gas companies on new
petroleum projects. In late 2015, LUKOIL-Komi organized a series of
public hearings in the town of Ukhta concerning development of the
Yareg oileld. According to available information, from 11 to 26 people
registered for each hearing (Mouhta.ru 2016), and it is dicult to say
whether these were formal events or real discussions that could make a
dierence.
ough in general the Russian public is notoriously passive (Osipian
2016, 215), a noteworthy event in relations between the local popula-
tion and oil companies took place in 2014, when residents of the Izhma
region in the Komi Republic held several meetings with representatives
of LUKOIL-Komi, accusing the company of environmental violations
15 Russia: Public Debate andthePetroleum Sector
282
and demanding that LUKOIL halt its activities in the area until it met
the conditions formulated by its residents. e main reason for this
demand was that LUKOIL had begun drilling near Krasnobor village
without the necessary permits and without informing Krasnobor resi-
dents and local authorities (CSIPN 2014). Commenting on this situa-
tion, Vladimir Chuprov, head of the Energy Unit of Greenpeace Russia,
said: ‘we witnessed a really historic event that could provide a new
direction in the development of civil society in Russia and in observing
the integral human rights’ (Chuprov quoted in Usov 2014). is devel-
opment was indeed unique for Russia. A compromise was reached
between the company and the Izhma region. LUKOIL continued its
activities there, signing annual agreements on cooperation with the
administration of the region (Municipal Region Izhemsky 2016).
However, it is unclear whether civil society in general, and the local
population of the petroleum regions in particular, would have been able
to achieve a similar victory over the more powerful companies Gazprom
or Rosneft.
Rosneft regularly publishes the results of public hearings on its web-
site, usually showing that the participants wholeheartedly approve its
projects. For instance, when Rosneft subsidiary the Far East Petrochemical
Company conducted public hearings on the construction of a petro-
chemical complex in Nakhodka on Russia’s Pacic coast, the local popu-
lation and representatives of environmental and public organizations
participated. e draft environmental impact assessment of the future
complex had been made public prior to the hearings. e top manage-
ment of the Far East Petrochemical Company met with local citizens and
responded to their questions (Neftyanaya Vertikal 2016). Given the
power of Rosneft, it may have been dicult for members of the public to
take a negative stance in the hearings.
Although big companies like Gazprom or Rosneft may not be easily
swayed by public hearings, smaller and less powerful companies may be
more responsive. On 15 July 2015, repeat public hearings were held in
Dudinka on the Taimyr peninsula, concerning the environmental
impact assessments of the company Taimyrneftegazdobycha for the
development of the Payakhsk and Severopayakhsk elds and the
N. Poussenkova and I. Overland
283
construction of the Tanalau oil terminal. e rst hearings had been
held on 30 April 2015 but were deemed invalid because of numerous
violations and incomplete documentation submitted for review. e
entire company management attended the second round. e
Association of Small Indigenous Peoples of Taimyr invited Greenpeace
to study and evaluate the materials provided by Taimyrneftegazdobycha
(RAIPON 2015).
e hearing lasted for more than three hours. However, the Association
of Small Indigenous Peoples of Taimyr, taking into account the opinion
of residents of Baikalovsk, drew negative conclusions on the construction
of Tanalau terminal on the Yenissei River: the risk of accidents was high,
and the company had no experience of handling oil spills in winter and
under the ice (RAIPON 2015). Taimyrneftegazdobycha is not yet an
inuential company, and there is a chance that the actions of NGOs and
the local people might aect its decisions.
Conclusions
Russia’s civil society engagement with the petroleum sector between 1991
and 2017 is surprisingly rich and varied for a country that ranks relatively
low on most democracy-related indicators and where large parts of the
population do not identify with theoil and gas industry (on Russian’s
identication with the petroleum sector, see Rutland 2015, 66). We have
noted the lively and varied public debate, with business associations,
research institutes, independent experts, environmental NGOs, indige-
nous organizations and a few remaining independent mass media actively
and often competently analysing and commenting on a broad range of
issues related to the oil and gas sector.
However, the real impact of civil society on decision-making and pol-
icy formulation in the petroleum sector is not as great as the diversity of
actors and discussion might imply; the inuence of the state on civil
society and on public opinion is much stronger than the other way
around. One key reason is the tight government control over the main
media, especially television—whether directly or indirectly through
15 Russia: Public Debate andthePetroleum Sector
284
Gazprom’s media holdings, pressure on advertisers and other measures.
Russia lacks the independent media element that could channel and
amplify civil society awareness and discussion into real inuence on the
petroleum sector. e situation for free speech and civil society worsened
steadily from around 2004 to 2017, and the full, long-term eects of this
may not yet be fully noticeable.
Ironically, given the maturing oil and gas industry, and the growing
domestic and international challenges facing Russia’s petroleum sector,
the intellectual input of a broad and diverse civil society and a more
active public debate on petroleum issues in the few remaining indepen-
dent mass media could have been highly valuable for decision-makers,
helping maintain and strengthen Russia’s position as a major energy pro-
ducer and exporter.
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