Extractive Industries and Public Participation in Russia: The Case of the Oil Industry in Izhemskii District, Komi Republic

Abstract

This article focuses on the participatory rights of local people living in the areas of extensive oil industry operations in the Izhemskii district of the Komi Republic in Russia. The district has long been suffering from oil leaks and resulting negative environmental impacts. Lukoil-Komi bought the business directly after the Soviet era and inherited the ecological threats related to old and rusty pipelines. Lukoil-Komi has promised to put things in order, but a great deal remains to be done.This article scrutinizes how statutory law and private governance interact in protecting the participatory rights of local people living in the vicinity of oil production in Komi. First, we evaluate what participatory rights Russian legislation guarantees to local people when oil production arrives in a new area or when new wells are being explored or opened. Second, we elaborate how the major oil company in the region – Lukoil-Komi – fulfills its corporate social responsibility (CSR) in the area of participatory rights and how local people feel about their possibility to exercise their participatory rights. As participatory rights, we discuss both procedural justice with public hearings and distributive justice in the form of benefit-sharing between the company and local community. The wider perspective on participation is due to Russian CSR practices. In Russia, companies tend to earn their Social License to Operate (SLO) through benefit-sharing, often within private governance. This practice is based on the social partnership agreements between authorities and companies. These contracts have path-dependent features resembling earlier Soviet solutions. The same can be claimed to apply to a wider SLO with more focus on local communities. We argue that Lukoil-Komi has not yet been able to achieve an SLO (local acceptance) due to the lack of participatory rights and continuing environmental problems. Most local people are not willing to trade a clean environment and participatory rights for the social benefits the company offers. However, the social partnership agreement concluded between Lukoil-Komi and a local NGO, Izvatas, could be a step forward in achieving a local SLO.

Industrial Projects and Benefit-Sharing Arrangements in the Russian North. Is Contracting Possible?

“…Sometimes the corporations conduct a monologue and perceive their duties as being fulfilled by informing the public about the corporate plans. In other cases, stakeholders use the opportunity to speak to the community to raise issues that are not linked to the corporate activities, but in many cases to the municipality [41]. Discussing topics that are not related to the project cannot lead to consensus building regarding the potential conflicts between the parties.…”

“…Whereas stakeholder protests in many countries have led to improvements in the situation of the stakeholders, to this date demonstrations in Russia have rarely led to significant changes. Socio-economic agreements are, in many cases, the outcome of informational meetings, but not meetings characterised by a fruitful debate [41]. Stakeholders in Russia must find ways to build stronger consensus among themselves and should appoint spokespersons who are continually in dialogue with the corporate decision makers, as well as with the authorities and media [32,41].…”

“…Socio-economic agreements are, in many cases, the outcome of informational meetings, but not meetings characterised by a fruitful debate [41]. Stakeholders in Russia must find ways to build stronger consensus among themselves and should appoint spokespersons who are continually in dialogue with the corporate decision makers, as well as with the authorities and media [32,41]. Proactivity is not only a prerequisite for successful businesses, but also needed from stakeholders for a successful realization of their demands [38].…”

“…A few relevant studies that put benefit-sharing at the centre of the analysis are outlined in this paragraph. The issue of benefit-sharing agreements has been raised by Tysiachniouk, Petrov and Tulaeva [6,44], Britcyna et al [41], Wilson [45], Chaknazarov [17] and Novikova [46]. Tysiachniouk, Petrov and Tulaeva define different benefit-sharing modes, observing cases in the Russian Arctic and Alaska.…”

“…Sometimes, the elaboration of the agreements may take several years before it is completed [47,48]. When concluding these agreements, the parties usually do not provide a great deal of detailed information in the agreement, which contains a preamble specifying the names of the parties, the date and place, and the goal of the agreement: e.g., "on the one hand, the company will develop the fuel and energy industry in the region, improve the region's economic situation, and maintain the social stability and social welfare of the region, and, on the other hand, the government is obliged to take steps to ensure a positive investment environment for all business entities" and some other general provisions [41].…”