TED Case Studies

Khanty Mansi Oil Development

Case #499

Case Name: Russoil

By: Sarah Shields



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I. Identification

1. The Issue

In the early 1960s, when huge oil reserves were discovered in western Siberia, Soviet ecologists sent oil drillers to the region to construct pipelines in swamps and underground, and create industrial centers for extensive oil exploration and extraction. Due to the abundance of natural resources in western Siberia, the Soviet Union became dependent on the region in order to bolster its stagnant economy through the export of crude oil. Although the Soviet Union has since disintegrated, Russia continues the former Soviet practices of exploitation of western Siberia's natural resources at the expense of the environment in its efforts to support its national budget and strive to compete in the world economic order. Oil production in the region which produces an estimated 186.5 million metric tons of oil (66% of Russia's total oil production) has had a devastating social impact on the indigenous peoples that have lived on and thrived off the land for thousands of years before the arrival of the Russians. One such tribe of indigenous peoples is the Khanty who are traditional hunters, and reindeer herders. Their once open wilderness has been polluted by oil and damaged through deforestation, thus causing the Khanty to alter their traditional ways of life.

2. Description

Historical Perspective: The Traditional Lifestyle of the Khanty Culture

The Khanty culture dates back to the second half of the first Millenium A.D. For thousands of years, the Khanty have lived along the Ob river adapting to the forest-swamp ecosystem in now what is known as the Khanty-Mansi Okrug in the Tyumen Oblast of Russia long before the arrival of the Russians in the 17th century. Although the southern Khanty no longer live the traditional lifestyle, the eastern and northern Khanty continue to maintain their traditional activities as hunters, fisherman, and reindeer herders in a quickly industrializing region. Khanty who live along the river traditionally have been the fisherman while Khanty living on the upper reaches of the river devote their time primarily to hunting. (Levin and Potapov, 518).

The economy of the Khanty is supported by a combination of fishing, hunting and reindeer herding. From September to December, Khanty hunters hunt elk, wildfowl, fox, and squirrels then move to their winter settlements which are huts made of thin beams or thick boards with no ceiling and a two-sided roofs. (Levin and Potapov, 525) Fire is the only form of lighting and heat during the winter months. In mid-January, the hunters emerge from these winter homes and travel to market to sell furs, deerskins, and barter with other tribes for fish and wooden products. Hunting continues from January until mid-April when the rivers open up after the winter thaw and the hunters move towards the rivers for summer fishing. Although Khanty have used guns since their introduction in the 20th century, hunting is primarily done with bows and spears.

Reindeer and Culture:

Reindeer are of particular importance to the Khanty culture because they are used for a multitude of purposes such as food and clothing. Bones are also often used to make buttons and knife handles. No part of the animal is wasted. Often ears, lips, kidneys, and eyes are eaten, while extra meat is preserved for the winter months when temperatures dip down to 50 degrees below zero. Fish and timber are also extremely important to the Khanty. Approximately 70% of the Khanty diet consists of fish. Trees are used to build dwellings and are often hallowed out to make canoes for transport on the rivers. Wild berries are also an important source of food for the Khanty reindeer.

The Emergence of Oil Industries in Western Siberia:

The Khanty have thrived on the land for thousands of years living this somewhat primitive lifestyle. However,in the 1960s life for the Khanty began to change drastically with the intrusion of oil companies. Since the 1960s when oil was first discovered here, houses have been built and large bonuses offered to industrial workers as incentives to move to the area to drill for oil and install pipelines. Two major cities were also built, Surgut and Nizhnevartovsk, to accommodate the influx of migrant workers coming from all over the Soviet Union. Recently published figures illustrate how rapidly the population has grown in Khanty-Mansi. In 1959, the population of Khanty-Mansi was 124,000; today the number has skyrocketed to over one million inhabitants, 22,000 of which are Khanty (Wilson, p.22). Unfortunately for the Khanty, the increase in the population in the area has affected the availability of resources. For example, many of the oil workers fish and hunt, not just for food, but for sport, thus depriving the Khanty of animals they need to survive.

The demise of the Soviet Union has only added to these environmental problems. The introduction of privatization in 1993 has given regional oil companies control over production. Although this has been a positive step in terms of Russia's transition to a market economy, the increased number of companies moving into Khanty-Mansi and other western Siberian areas have concerned themselves more with the maximization of profits from oil exports than the livelihood of the environment and the peoples living on the land. Western companies such as AMOCO also have become involved in oil exploration in the area, creating partnerships with Russian oil companies such as Lukoil and Surgutneftegaz. As of 1997, AMOCO was preparing for an oil exploration expedition jointly with Russian oil companies in the Khanty area (see- Project Underground).In addition, Russia, in June 1997, signed a trade pact with China the goal of which is to increase trade between the countries by $7 billion dollars annually up to $20 billion dollars by the year 2000 (See-Energy Information Administration's Russia Oil Report). Foreign investment and trade has been increasingly important to Russia because it allows for greater opportunity for development in this economic sector. Unfortunately, however,the presence of foreign oil companies has increased the concern among the indigenous peoples. They are increasingly being introduced to technology they are not familiar with, and are facing greater threats to their culture from the introduction of western values and customs.

Problems With Oil Development:

One of the main problems with oil development is that until recently, "Russian drilling technology [has been] primitive, and expedition members concluded that it was to blame for much of the environmental damage" today (Pearce, p.28) As of 1993, no technological devices had been installed along the 7000+ kilometers of pipeline running through Siberia to detect or track oil leaks. As a result, when leaks occur, it is very difficult to identify which section of the pipeline needs to be mended. Until the leaks are discovered, the oil pollutes the soil,flows into rivers and streams, killing vegetation and fish along the way. Many of the pipelines are now corroded, leading to greater likelihood of pipeline breaks. In 1990, the Current Digest of the Post-Soviet Press reported that the amount of oil in the Ob river, the river on which the Khanty live and rely, was approximately fifteen times greater than the "maximum permissible concentrations" (p.21). The area has been a disaster zone because at least one-half of the 57 cubic meters of untreated waste from oil and gas production flows into water sources (Current Digest of Post-Soviet Press, p.21) The Khanty have been adversely affected by the leaks. Sturgeon, and the other fish dying from oil pollutants are leading to a shortage in the food supply of the Khanty who primarily rely on fish as their main source of food. Reindeer, which are important to the culture, are increasingly dying as well due to their consumption of oil contaminated berries and vegetation. Since the Khanty economy, and livelihood of the people, rely on fishing and reindeer herding, their traditional way of life is being altered.


Another major problem with oil development is that national energy production has been the primary focus while conservation of natural resources and other environmental and social concerns have been largely ignored, or given secondary importance (Osherenko, p.226). Although many investors and international lenders such as the World Bank are increasingly providing loans for the transfer of more efficient and cleaner technology for oil extraction and refinement to Russia, they have put little emphasis on revitalizing sustainable local economies of indigenous peoples who fish and hunt, such as the Khanty.

Oil development has alienated significant parts of the Khanty population from its traditional activities by cutting down or burning forests used by the Khanty and other indigenous tribes for building settlements and canoes, in order to make way for the construction of roads, housing for workers, and pipelines. As early as the late 1980s, 22 million hectacres of reindeer pasture had already been destroyed by fire and oil pollutants (Fondahl, p.221). Many animals important to the hunting culture, fox, sable, bear, and minx, have perished through these activities. The degradation of Khanty hunting grounds have caused a shift in migration to towns and cities, and increased social problems such as alcoholism and crime. The Khanty are being deprived of their main sources of income from the sale of deerskin and furs and are thus becoming impoverished (see- "Twilight of the Reindeer Herders?" by Geoff Winestock).

Other Sociopolitical Impacts:

As noted above, the intrusion of oil companies in Khanty Mansi has led many Khanty who can no longer earn a living hunting or reindeer herding to move to towns and cities to work for the oil companies. In the early 1990s, drilling foremen were earning 1,000 rubles a month which is five times greater than wages of the average industrial worker (National Geographic, p.35). Today, it is estimated that less than 50% of indigenous peoples, including the Khanty, engage in traditional activities (Fondahl, p.220). As years go on, new generations of young Khanty will probably become more susceptible to the lure of powerful oil companies with their high technology, and altogether abandon their traditional lifestyles ultimately leading to the extinction of their unique culture.

In addition, the presence of the industrial force in Khanty Mansi has also increased incidents of criminal trespass, theft, and sport hunting of reindeer, fox, and other species (see- "Black Snow: Oil and the Native Peoples of West Siberia" ). Religious holy sites and burial grounds have continually been desecrated or access to these sites have been denied to the Khanty.

In general, life for the Khanty has taken a turn for the worse as living standards have dropped with increased oil production and pollution in Khanty Mansi.

Rights to Land and Environmental Protection::

Despite the fact that the Constitution of the Russian Federation includes an article guaranteeing more rights to indigenous peoples (Article #69), rights to land, including hunting and trapping areas, have been limited. Some legislation has been introduced allowing indigenous groups to own some of the land, establish "family domains" and refuse oil company requests to drill on the land, however, legislation has been poorly implemented and often ignored. Oil companies are very powerful because the revenues they bring in from oil exports often supports Okrug budgets. Therefore, land rights are hard to protect. Other legislation passed by federal and Okrug governments have required oil companies to obtain lease and compensation agreements from the Khanty before drilling or installing pipelines in inhabited areas. Many agreements, however, are falsified, signatures are coerced, and oil drilling continues often without knowledge or consent of the Khanty (see-"Alternative to Genocide" by Andrew Wiget). Often if compensation is given to Khanty landowners, it is in the form of snowmobiles, houses, or food; items that temporarily may satisfy some but do not attempt to solve the long-term environmental problems which persist. One other piece of legislation introduced in March 1992, was the environmental protection law which imposed a $1 million ruble fine for every ton of oil spill. Yevgeni Bolshagin,who manages the Samotlor oilfield outside of Nizhnevartovsk, has complained that, "No one provides the equipment to meet the new norms" (Berger, p.43). Until better equipment is provided, the problem will continue.

Most recently, the Khanty have become politicized due to the problems they face. An association of Khanty intelligentsia has thus formed "Spasensie Yugra" ("Yugra" is the historical name for the region) to promote Khanty traditional culture and values and protect land from oil company intrusion. Unfortunately, the fight by the Khanty alone is not enough to challenge the power of the oil companies and the Okrug government that relies so heavily on oil revenues. The situation is a type of catch-22. Investment and oil revenues are badly needed to boost the Russian economy back, however, it has been at the expense of many indigenous tribes.

Flag of Khanty-Mansi

3. Related Cases

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    4. Draft Author:

    Sarah Shields

    June 1998

    II. Legal Clusters

    5. Discourse and Status:

    Disagreement [DISAGR] and Inprogress [INPROG]

    6. Forum and Scope:

    Russia and Unilateral (Federal and Local Okrug government)

    7. Decision Breadth:

    One country is involved-Russia

    8. Legal Standing:

    Law Laws have been made on both the federal and okrug levels requiring oil companies to get lease and compensation agreements from the Khanty (and other indigenous tribes) living on the land before any drilling is done. In 1992 a federal environmental protection law was passed obligating oil companies to pay one million rubles per one ton of oil spilled.

    III. Geographic Clusters

    9. Geographic Locations

    a. Geographic Domain: Europe

    b. Geographic Site: East Europe

    c. Geographic Impact: Russia

    10. Sub-National Factors:

    yes

    11. Type of Habitat:

    Cold.
    Often temperatures in the region reach 50 degrees below zero in the winter months. The Khanty have adapted to the temperatures and have been able to thrive on the land for over five thousand years in these conditions.For example,the indigenous tribe has traditionally used the skins of deer, and the fur of fox, sable, and minx to make clothing and keep warm during the coldest periods. The Khanty also tend to move from settlements on the rivers inland during winter, and live in homes built of wood as opposed to the summer homes which are essentially tents made of animal skins.It should be noted that summer in Siberia is still quite cold.

    IV. Trade Clusters

    12. Type of Measure:

    [REGSTD] Regulatory Standard

    13. Direct v. Indirect Impacts:

    Indirect

    14. Relation of Trade Measure to Environmental Impact

    a. Directly Related to Product: yes, oil

    b. Indirectly Related to Product: yes, reindeer

    c. Not Related to Product: no

    d. Related to Process:yes, there has been habitat loss

    15. Trade Product Identification:

    Oil

    16. Economic Data

    According to the BISNIS industry report on Western Siberia, oil industries in the Tyumen Oblast produced 186 million metric tons od oil in 1996. This production equalled approximately 66% of Russia's total oil production during this year alone. The $1.5 trillion dollar oil business provides the Russian economy with the largest source of income from oil exports. As a result, Russia has grown dependent on this industry as well as the gas industry.

    17. Impact of Trade Restriction:

    medium

    18. Industry Sector:

    Oil

    19. Exporters and Importers:

    Russia exporting oil to many countries worldwide

    V. Environment Clusters

    20. Environmental Problem Type:

    Pollution of the Land [POLL]
    Oil has been contaminating soil and water sources, the Ob river in particular. Many different species are likely to be affected as oil companies fail to detect oil leaks, and continue to clear out trees in order to construct housing complexes, roads, and pipelines. Many animals will either perish or be forced to abandon their homes. The Khanty tribe will also continue to be adversely affected by the pollutants. Health problems among the Khanty have risen.

    21. Name, Type, and Diversity of Species

    Names of Species: Reindeer, beer, badger,sable, fox, minx, fish, birds, wildfowl

    22. Resource Impact and Effect:

    High and Regulatory

    The problems caused by the oil industry in Russia are resource concentration problems, which means that many of the byproducts of the industry include pollution, and waste. The oil reserves are not being efficiently drilled so millions of tons of oil are wasted a year.The oil that is drilled often is not refined through the cleanest methods, thus leading to air, and soil pollution. The pollution in turn affects the animals that feed off of the land, causing them migrant in search of cleaner food sources.

    23. Urgency and Lifetime:

    medium

    24. Substitutes:

    Like

    VI. Other Factors

    25. Culture:

    Yes. The Khanty have been forced to alter their lifestyle. Oil companies have devastated the economy of the Khanty who fish and hunt for their sources of income. Many young Khanty have also given up traditional activities in order to work for the oil companies.

    26. Trans-Boundary Issues:

    Yes

    27. Rights:

    Yes
    Rights of Indigenous peoples, such as the right to land and rights to cultural preservation, are under emphasized by western and Russian oil companies. Land is being drilled or deforested without the consent or knowledge of the Khanty tribes living on the land. Their main sources of food (fish, fox, deer, and reindeer) are increasingly falling prey to pollutants from the oil development. The presence of the oil industry has thus altered the traditional way of life of the Khanty and other indigenous tribes.

    28. Relevant Literature

    Berger, Roman "After the Oil Boom" World Press Review (November 1993)

    Fondahl, Gail. "The Status of Indigenous Peoples in the Russian North" Post-Soviet Geography (V.36 No.4, 1995) pp.215-224

    Katasonov, Valentin. "Siberian Oil: Profits vs. Environmental Costs" Current Digest of Post-Soviet Press (V.42 No.20, 1990) p.21

    Levin, M.G and l.P. Potapov eds. Peoples of Siberia (Chicago: University of Chicago Press), 1986

    Osherenko, Gail. "Indigenous Political and Property rights and Economic/Environmental Reform in Northwest Siberia" Post-Soviet Geography (V.36 No.4, 1995): pp.225-237

    Pearce, Fred. "The Scandal of Siberia" New Scientist (27 November 1993) pp.28-32

    "Siberia: In From the Cold" National Geographic (March 1990) pp.10-39

    Wilson, David. Soviet Oil and Gas to 1990 (Cambridge, MA: ABT Books), 1990

    Related Web Sites:

  • Indigenous Environment Network
  • BISNIS--This site has country and industry reports for the NIS
  • USAID--This site has information on environmental problems on countries worldwide.
  • US Energy Information Administration
  • Artic Circle- More articles on the Khanty and Russian oil industry.




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