Social, economical, geopolitical, environmental aspects
Wednesday 15 March 2006, by Maria Shilina
The oil terminal capacity in the Russian territory of the Baltic Sea is constantly increasing. Primorsk is developing to the biggest oil terminal around the Baltic Sea. The question is, how to make this development sustainable.
Summary
The problems of sustainable oil transportation in the Gulf of Finland (Baltic Sea) were studied during the summer and autumn 2004 on the example of Primorsk town (Russia).
The importance of oil transportation through the net of new Russian harbors constructed in the coastal zone of the Gulf of Finland is shown, from economical and geopolitical points of view. The peculiarities of oil sector as the backbone of Russian economy is postulated. Alternative ways of oil transportation are compared.
The possibilities of sustainable development of the oil sector are discussed. The following principals of sustainable transportation are postulated:
1. Minimization of environmental risks through the ban on single-hulled oil tankers, mandatory use of pilot-boats, mandatory ice-classification, electronic navigation equipment, and classifying the Baltic sea as a Particularly Sensitive Sea Area (PSSA).
2. Involvement of local stakeholders in the decision-making process about development of the coastal zone.
3. The possibilities of integrating Russia closer to the relevant decision-making bodies of the European Union.
4. The administrative support of strongly protected nature areas in the coastal zone, in the neighborhood of new harbors. Future prospects of Russian Baltic ports, in accordance to the national policy, are presented. The strategic interests of different stakeholders are compared. Public opinion to the development of the oil transportation infrastructure was studied, using the method of research survey by questioning local people in Primorsk.
The importance of PR-activities for the sustainabilisation of the oil transportation is shown.
The importance of the oil sector in the Russian economy
Russia is the second largest crude oil producer after Saudi Arabia, and remains the worldâ€TMs second largest exporter of crude oil and petroleum products. The oil industry is the backbone of the Russian economy. It forms:
* Primery energy consumption: 19%
* Gross Domestic product: 8%
* Federal tax revenues: 39%
* Exports: 37%
Oil reserves
Russia’s oil cluster includes more than 130 000 wells. Today, around 2000 oil and gas deposits have been explored, of which around 900 are not currently in use. About a half of the total reserves are located in regions, which are difficult to access. Russia’s proven oil reserve would last for 20 — 50 years, while the worldâ€TMs average is around 30 years (1).
Mikhail Khodorkovsky, the Ex- Direktor of YUKOS, estimates Russiaâ€TMs proven oil reserves at 150 billion barrels (20,54 billion tones). “If someone simply summarises proven oil reserves of Russiaâ€TMs 10 largest oil firms, audited by international auditors, he would get a much higher figure than the official data suggest†(1).
There are three main directions of the oil product exports: (1) West-European, with transportation via the Baltic or the Black Sea; (2) Northern; (3) Far Eastern (China and Japan).
The Northwest Russia is one of the largest oil areas in the country. In terms of oil production volume, it is the third area after Western Siberia and the Volga region
Oil refining and transport infrastructure in Northwest Russia
Two subsidiaries of the largest Russian oil companies — KINEF (Surgutneftegaz) and Lukoil represent the oil-refining sector in the Northwest Russia. Surgutneftegaz and Rosneft are going to build a new refinery in Primorsk City.
There are four possibilities to deliver crude oil and petroleum products to the Sea port:
1. Oil pipelines belonging to private oil companies.
2. Oil trunk pipelines belonging to the state company Transneft (for example, BPS —Baltic Pipeline System —459-km pipe from Nenets Autonomous district to Komi Republic + pipes to Yaroslavl- Kirishi- Primorsk).
3. Oil product pipeline transportation system (Transnefteprodukt).
4. Railway.
Geopolitics
Russia after the break up of the USSR has found herself in a difficult situation in the Baltic Sea Rim with the exports of oil to some countries of Northern Europe. Oil was exported to these countries via sea from the Latvian and Lithuanian oil terminals (Ventspils, Butinge) + from the Polish port, Gdansk. Small volumes of oil were exported via Estonian oil terminal in Tallinn where oil was delivered by railway.
Taking into account economic and political aspects, the Russian government decided to solve this problem by constructing the Baltic Pipeline System (BPS). It gives Russia a direct outlet to northern European markets, allowing the country to reduce her dependence on transit routes crossing the territories of neighboring countries. The construction on the first stage of BPS was completed in 22 months, without any ecological complications.
Oil terminals on the Russian coast of the Baltic Sea
Existing:
* St. Petersburg Oil Terminal (now specializing in petroleum, in the future — also in crude oil).
* Primorsk (now spezializing in crude oil, in the perspective — also in petroleum).
Under construction: Vysotsk, Batareynaya Bay (both specializing in petroleum), Ust- Luga (crude oil).
Table 1: Existing and projected port facilities of the St. Petersburg Region (mt)
Strategic interests of major actors
The Russian government: “The Russian consignments — to Russian ports†; oil transit via any foreign state acts only as additional route, which the Russian terminals cannot handle themselves.
Local administrations: support Baltic routes of Russian oil and petroleum exports Oil companies: increasing oil export by different routes.
Transneft: developing BPS and attractive new oil flows.
Transnefteproduct: developing petroleum pipelines and attracting new petroleum flows.
Comparative advantages and disadvantages of the Russian Baltic harbors
Advantages:
1. Low costs of on-land cargo delivery from producing region to harbors
Disadvantages:
1. Poor quality of service (including logistics) in ports
2. Natural risks (shallow depth, small islands, freezing in winter)
3. Legal and administrative barriers in ports
4. Relatively unfavorable business climate in Russia
Shidlovsky, the president of Transsphera: “It is a paradox that while Russian operations are much cheaper, and taxes in Russia are lower than in Finland (providing that not all taxes are usually paid), still the overall costs of these services in Russia are frequently much higher, than in Finland, while the quality is worse†.
Future prospects of Russian Baltic Ports
It depends on two main factors:
1. National policy “The Russian consignments — to Russian ports†.
2. Some Russian oil companies are holders of various components transport infrastructure in Baltic sea region.
3. Baltic Sea Rim will be the dominating region in the Russian oil export policy in the mid-term, and longer run.
Environmental aspects
1. The accident avoidance is always less expensive than the damage cleaning.
2. The Baltic sea becomes almost completely the inner sea of the EU, with the exception of the Russian coast. The only effective method to prevent major oil average in the sea washing the EU shores is to integrate Russia closer to the relevant decision-making bodies of the EU.
3. The Nordic governments, through the Helcom initiative, have pressed hard for the implementation of a number of measures that would make transports safer and more controlled, such as ban on single-hulled oil tankers, mandatory ice-classifications, electronic navigation equipment, mandatory use of pilot-boats, and classifying the Baltic sea as a Particularly Sensitive Sea Area (PSSA).
4. The building of the Murmansk oil terminal (Barents coast) is economically and environmentally the most rational alternative, since the Murmansk port is ice-free all the year round and can serve three times bigger tankers than even the largest Russian port in the Baltic Sea.
Involvement of local people
One of the most important components of sustainable development is the involvement of local people into the process of decision-making about the coastal zone. Public opinion to the development of the oil transportation infrastructure was studied, using the method of survey research by questioning local people in Primorsk in Summer 2004. The work consists of statistical analysis, which reconstruct the opinion of people who live in Primorsk to the building of the new oil terminal in this area. To observe the main changes and tendencies in public opinion of Primorsk during the last five years (based on the previous sociological research surveys), several tables are included.
The town has about 5000 inhabitants. 190 respondents were questioned in the Summer 2004. However, 20 respondents didnâ€TMt complete the questionnaires properly, so the research is based on the analysis of 170 completely filled forms. People in the center and suburbs of Primorsk have been questioned.
The most active participants of this survey were the native inhabitants of Primorsk (almost a half of the respondents). About one fourth of the questioned people were not born in the town (Figure 1).
Figure 1:
The duration of living in Primorsk
The majority of respondents are between 20 and 60 years old. Most of them have a secondary education, and about a half - university education (both completed and uncompleted)(Figure 2,3).
Figure 2:
Age of the respondents
Figure 3:
Level of education
More than a half of respondents are employed, only 12 % are unemployed. About 70% of the participants are officials (Figure 4).
Figure 4:
Occupation
The respondents have been asked about their family status in order to define the social group which would be mostly interested in the sustainability and safety of their region, because those respondents who have a family care also about their relatives. 40% of them were married long ago, 40% are single, 19% have been married recently (Figure 5).
Figure 5
Family status
Talking about the spreading of news, only 11% of the respondents are satisfied with the information about construction of the new oil terminal that they receive from the Mass Media. 38% of the respondents “would like to know more†, 17% estimate this information as “sufficient, but not objective†, 14% “donâ€TMt know anything†, and 20% “receive the information from friends and relatives†(Figure 6).
Figure 6
Information in the Mass Media: is it enough?
The respondents were also suggested to take part in a virtual voting that could have taken place in reality before the beginning of building the port complex. They answered the question: “Primorsk oil terminals: to be or not to be†. The results are presented below and compared with the statistics of 1999-2003 (Table 1).
Figure 7
Public Opinion to the building of Primorsk oil terminal
Table 2
The evolution of public relations to the building of Primorsk oil terminal, using the material of social researches 1999-2004 in Primorsk
There are two main tendencies in the public opinion during the year 2004. First of all, the number of people who support the project of building the oil terminals in Primorsk has decreased and is 10 % less than during the last year (2003). Secondly, the number of respondents who have no exact opinion about building the oil terminals or donâ€TMt really care about the situation, is constantly increasing. The respondents were also suggested to estimate in the questionnaire the influence of building and using the oil terminals in Primorsk on the ecological situation in the Finnish Gulf and its coastal zones. Half of the respondents think that the Primorsk oil terminal harms the environment and would influence the situation in the whole Finnish Gulf badly. About 40 % of respondents are worried by the possible degradation of local environment near the Primorsk oil terminal in the future. Only 10 % think that the Port complex would have no influence on the ecological situation.
Figure 8
The influence of the port complex on the environment
The rest of the questions were intended to find out the expectations of local people connected with the building of the oil terminals in Primorsk. The majority of respondents suppose that building of the oil terminals would change the status of Primorsk and in the future it will develop into a modern industrial city with a much bigger population and more possibilities of finding a good work. Many inhabitants of the town need a job, but the port complex has created almost no new working places.
Figure 9
Will the Port complex provide new working places with good salaries?
However, only 19% of the respondents think that the functioning of the Primorsk oil terminals would bring real economical benefit (Fig. 10).
Figure 10
Expectations of economical profit
Those respondents who support the project of building the oil terminals in Primorsk are mostly young people who donâ€TMt have a family yet and are less responsible for their decisions. Besides, most of such respondents are unemployed or still study and hope that transporting oil will turn Primorsk into a highly developed industrial city where they could find a good work.
The respondents who are against building of the oil terminals in their town are mostly native inhabitants of Primorsk who have families and work mostly as fishermen, because fishing is the traditional occupation of people who live in this port town. They donâ€TMt want any changes in their live and see the new port complex as environmentally unfriendly, because the building of oil terminals has scared all the fish around and disturbs the fishermen by their traditional occupation.
However, all the respondents want the safety and sustainability of local environment.
The results of statistical analysis show that people in Primorsk donâ€TMt feel their relation to the oil terminals and problems of sustainable oil transportation. The port complex of Primorsk and the local population donâ€TMt have any contacts, any common ideas or interests. Only 19% of respondents expect the new oil project to be economically profitable for the population, only 11% receive enough information about building of the oil terminals. 40% say that they “donâ€TMt know†the real situation and donâ€TMt really care about it. However, the question of oil transportation is one of the most important questions nowadays. The more people are involved into this problem and into such projects as in Primorsk, the less risk it is to damage public interests and environmental sustainability. Thatâ€TMs why the public indifference to the development of oil terminals in Primorsk should be improved. The port complex should make the public interested in problems of sustainable oil transportation by providing new work places, involving local people into the process of building and using the Port complex, spreading more information about it in the Mass Media.
References
1. Growing Russian Oil Shipments in the Baltic Sea: Strategic Decision or Environmental Risk? — Kari Liuhtto (Ed.), Lappeenranta University of Technology, Lappeenranta, 2003: p. 370
2. UNESCO Baltic Floating University Research Bulletin N 4-5, 2002: p. 124
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