Is Russia Ready for a Shipping Boom?

The trans-Siberian pipeline is Russia’s largest infrastructure investment at $17 billion. When completed, it will stretch from Lake Baikal to the Sea of Japan, more than 4,000 kilometers and allow Russia to ship oil to China, Japan and even the US. Yet the pipeline has become the focus of debate for Russia, neighboring countries, international oil companies and conservationists who worry that the nation can’t handle any surge in oil and gas shipping over the next decade. Oil spills in Arctic could be particularly dangerous to coastal economies and environment. Oil companies are teaming up with environmentalists and neighboring governments, encouraging Russia to improve its shipping and cleanup policies, meet international standards and protect fragile coastal waters. – YaleGlobal

Is Russia Ready for a Shipping Boom?

Sarah J. Wachter
Monday, October 2, 2006

When Russia's state pipeline monopoly, Transneft, announced in late July that it planned to build an oil terminal in Kozmino Bay, beside the existing industrial port of Nakhodka, scientists and environmentalists exhaled a collective sigh of relief.

The decision reversed an earlier plan to build the terminal at Perevoznaya, an unspoiled bay near Vladivostok that is close to Russia's only maritime nature reserve.

The terminal would be the end point of the trans-Siberian pipeline, the world's longest and, at $17 billion, Russia's largest infrastructure investment.

When completed in a decade or so, it will transport oil on a 2,565-mile, or 4,130 kilometer, journey from the Lake Baikal area to the Sea of Japan. From Kozmino Bay, the oil will be shipped southward to China, eastward to Japan - and possibly to the United States.

Opponents of the plan to build the terminal at Perevoznaya based their objections on logistical, safety and environmental arguments. Perevoznaya would have required oil tankers to maneuver in shallow waters, through a channel dotted with tiny islands, in frequently windy and foggy weather. And the bay is full of chunks of ice about four months of each year.

"No one knows how to respond to an oil spill in these conditions," said Sergei Moninets, director of the Sea Protection Institute, which is part of the Maritime State University in Vladivostok.

The fight over the terminal, pitting conservationists against the opaque and often autocratic processes of the state, was the latest face-off in a growing debate about Russia's lack of planning and preparedness to handle an expected surge in oil and gas shipping through the Russian Far North and Far East in the next decade.

"Current Russian shipping standards fall well below international standards," said Tatiana Serykh, an oil and gas specialist at the World Wildlife Fund in Moscow.

To address the challenge, scientists and government agencies outside Russia are stepping up their environmental impact assessments of oil and gas shipping in the Barents Sea, which harbors the world's largest cod stocks, as well as large stocks of herring. Important salmon rivers also flow into the Barents.

Neighboring governments, including Norway, are seeking closer cooperation with their Russian counterparts to help raise shipping standards, study underwater biodiversity and more accurately determine the extent of environmental degradation resulting from oil and gas activities. Westbound oil tankers from Russia pass along Norway's coastline and its year-round fisheries.

In the past year, Norway has called for closer cooperation with Russia on oil transport and environmental management, and in July it submitted a proposal to the International Maritime Organization to reroute Russian tanker traffic away from its fishing grounds and coastline.

Meanwhile, international oil companies are nudging Russia toward adopting international standards on oil spill response. BP's Russian joint venture, TNK-BP, only signs long-term contracts with Russian oil terminals and shipping companies that meet its environmental standards, said a TNK-BP spokeswoman, Maria Dracheva in Moscow.

"Oil transportation along the coastline is one of the hottest topics discussed in the region for the recent two years," according to a report on Russian oil transport in the Barents Sea by the Svanhovd Environmental Center, on the border between Norway and Russia.

Russian oil shipments have been rising since 2002, when they reached four million tons. By the end of this year, shipments will hit about nine million tons a year, said Salve Dahle, director of Akvaplan, a Norwegian environmental consultancy. Most tankers are bound for the main European oil port of Rotterdam but some steam on to Galveston, Texas and Portland, Maine.

Russia may have the potential to ship as much as 150 million tons of oil a year by 2010, depending on the extent of foreign oil company involvement in developing Russia's northern oil fields, the Svanhovd report said.

"Russia simply isn't prepared for large-scale shipping like that," said David Gordon, executive director of Pacific Environment, a conservationist group in San Francisco.

Russia's export tankers are in good shape. Most are recently built double- hulled vessels, in line with the international agreement to phase out single- hulled tankers, struck by 135 countries, including Russia, after a disastrous oil spill off the French coast in 1999.

Still, experts worry that shipping standards may slip as Russia's oil output increases.

"In the next decade or so, for economic reasons, bigger ships may be used, which may not be of the same modern standard as current, smaller ships," said Bjorn Eric Krosness, chief engineer for the Norwegian Coastal Administration, a national agency for coastal management and marine safety.

Another risk is posed by Russia's aging inland fleet - the vessels plying its canals, rivers and lakes, Serykh and Dahle said. "Tankers leaving Russia are state of the art. But inside Russia, they are not using state of the art," Dahle said.

Fishing trawlers and dry cargo vessels also are increasingly plying Russia's northern waters. Often old and poorly maintained, these ships are susceptible to engine failure and bunker fuel oil leaks in storms, when oil recovery is particularly difficult, said Lars Otto Reiersen, of the Arctic Monitoring and Assessment Program, an environmental monitoring body.

Experts worry that an oil spill in Arctic waters would have potentially disastrous consequences on the continental shelf, where water depths of only 20 meters to 30 meters, or 65 feet to 100 feet, stretch for hundreds of miles in an underwater extension of the flat Siberian plain.

In these conditions, the inability of spills to disperse into deeper water could be compounded by subzero temperatures in which few micro-organisms exist to break down the oil, and in which the viscosity of oil increases, making it tougher to pump and recover.

No reliable, systematic method for reporting oil spills has been followed in Russia for a decade, Moninets said.

Even so, there is evidence that the amount of oil spilled from small incidents is on the rise. Several spills have occurred in the past three years during oil transfers from small feeder tankers to larger ocean-going vessels in the White Sea and from railways to ships at oil terminals, Dahle said.

Accidental spills from oil activities in Russia grew to 737 tons in 2003 from 100 tons in 2002, the Svanhovd report said.

Small and medium-sized Russian oil producers are a particular source of transport and storage risks, routing oil through temporary docks and ports on the White Sea coast, or using single- hulled tankers, which are more likely to be involved in spills, for storage before shipment to the main crude oil port of Murmansk, Serykh said.

Also, "the number of single-hulled tankers in Russia has risen dramatically" with tankers decommissioned elsewhere reappearing in Russia, she said.

But oil companies have also begun to cooperate with environmental groups. At a recent meeting of the two factions, organized by the International Petroleum Industry Environmental Conservation Association in Tromso, Norway, two companies with a body of experience operating in the Arctic, Norway's Statoil and ConocoPhillips, agreed to work on joint biodiversity projects with environmental groups and to share their biodiversity research to address the challenge of safeguarding the Arctic waters off Russia and Norway.

Copyright © 2006 The International Herald Tribune