Oil community in transformation Verhnemarkovo case study Corporate

Oil community in transformation: Verhnemarkovo case study Corporate Social Responsibility, 11. 02. 2015

Questions to discuss • How oil communities transform? • How international norms are taken into account? • How relationships between the company and community are build?

Oil companies • Angaro- Lensk geological survey expedition in the 1960 ies • Perestroika-collapse of Angaro-Lensk expedition in 1995—two private oil companies were formed: Irkutsk oil Company and Dulisma • Irkutsk Oil Company received a loan from the Bank of Reconstruction and Development-the bank co-owns the company • Dulisma-close to bankruptcy

Norms of the Bank of Reconstruction and Development ISO certification of environmental management UN global agreement on indigenous peoples Environmental and social policy Consultations with local communities, conflict resolution procedures Support for community infrastructure, local employment

Russian Norms • Social-economic partnership agreements with regional, municipal and local governments. Oil company is a kind of milking cow. • All oil taxes go to the federal level. Only employees income tax to the local level

Verchnemarkovo • Ust Kut, Irkuitsk oblastregional center • On Baykal-Amur railroad • Oil and forest • Verhnemarkovo 150 km from Ust Kut • Verhnemarkovo is an ancient village-350 years • In 1962 Angaro-Lensk expedition found Kembriiski oil

History • Since 1960 geological survey. In 1962 -oil fountain • Celebrating the disaster “the heart was filled with joy, washed the face with oil, tried the smell and died from gas poisoning” • The settlement was flooded by oil, river Lena was polluted by oil, people were evacuated • People coming for oil drilling from all over Russia

«In 1962 when the fountain exploded, everything was flooded by oil, but this was joy!”

From traditional village to oil settlement

«Here will be build the town Neftelensk» • «I came to the flourishing settlement, populated by youth in 1974. We were dreaming to build a town Neftelensk” • “Neftelensk was our dream town”

Transformation of oil settlement • Lensk expedition, 1000 people employed, 5 Culture Clubs, 5 kindergartens, 800 students at school. It was prestigious to come. • Perestroika: expedition collapsed, out-migration • Today: Irkutsk oil company and Dulisma, program for resettlement, but only sick and disabled can leave. Company helps community as part of CSR policy (not more then that)

Oil settlement

• «They need only oil, they do not need any people” • «We are totally forgotten, already two weeks no light, no heating” • «We are sitting on oil, we should swim in gold. Natural resources that our fathers and grandfathers found, we can not use ” • «People of Lenskaya expedition become hostages here”

• «We are accustomed to the smog and smell, it is always burning” • • «Oil is coming to wetlands, accumulates there, it has to be burned there” • «Every day smog is coming to the village, the most of it is accumulating around the hospital”

• «Do you feel the smell of money? » • “Beauty of nature, but people have cancer”

Нефтепроявления • « 40 лет назад был ядерный взрыв, много онкологических заболеваний, но говорят что заболевания по старости» • «Нефтепроявления прямо у наших домов, у людей в огородах»

Dams build by Irkutsk Oil Company

«Putinka» - oil tube going to Asiapacific region

Concluding remarks • Oil go to Asian countries through general pipe line • Money go to the owners and to the federal budget • Both resources and money go through the community, but can not be used • The company fulfills the international norms at a minimum level, NGOs are not involved • International norms help in improving workers safety, stimulate consultations with local communities, foster maintenance of community infrastructure. However, they can not influence the flow of resources and money and can not soften transformation of local oil-dependent community