Indigenous Peoples` Interests and the Oil

Indigenous Peoples' Interests and
the Oil-Gas Industry
R J Grover
G Ledkov
Department of Real President of RAIPON
Estate &
& State Duma of the
Construction, Oxford Russian Federation
Brookes University
Oxford, UK
Russian Federation
M M Soloviev
Department of
National Research
University Higher
School of Economics
Moscow, Russian
The problem with oil and gas
• Governments tend to regard oil and gas
reserves as a strategic national resource
• Their exploitation has significant impact eg
test wells, extraction boreholes, collection
pipelines, pumping stations, export pipelines,
housing and facilities for workers, roads,
landfills, power plants, maintenance facilities
• Exploitation involves displacing other activities
eg farming, hunting, fishing, plant collection
Issues with oil and gas exploitation in
the Arctic
• Severe climate places exploitation at
technological frontier eg liquefaction of gas
• Fragile natural environment that takes a long
time to recover from ecological damage
• Region has poor infrastructure – has to be
constructed by industry
• Low density of population so workforce tends to
be imported – local population do not have many
of the skills required
• Region is remote from consumers requiring
expensive delivery systems
Compulsory purchase compensation
• Intended to compensate losers so that they are no
worse off as a result of losing land or damage to land
• Assumes that losers can take their compensation
and acquire equivalent properties.
• But what if way of life is destroyed so that there are
no equivalent properties? History of resource
exploitation in Northern regions suggests this is the
case – human disturbance of flora and fauna and
impact on their reproductive rates
Environmental Impact of development
(United Nations Environment Programme)
Two case studies illustrating
alternative approaches
• Russian Federation Yamal Nenets Automoous
Okrug – compensation determined by precise
methodology to calculate total of different
types of loss.
• Alaska and Canada where the issue of
compensation is linked to that of land right
claims by indigenous population.
Industrial development of Circumpolar region
Yamal-Nenets Autonomous Okrug
Attitudes of oil and gas companies
• Oil and gas companies have corporate social
and environmental responsibility policies
• Have western investors, partners and lenders
• Seek to comply with ISO 14000
(Environmental Management) and ISO 26000
(Social Responsibility) standards
• Adopt policies like underground laying of
pipelines, avoid blocking animal migration
routes, and reducing impact on ecology
Russian approach to indigenous peoples
Russian Federation laws do not use the definitions employed by the
International Labour Organisation
ILO C107 Indigenous and Tribal Populations Convention, 1957 (more widely
ratified than 1987 Convention)
“1. This Convention applies to-(a) members of tribal or semi-tribal populations in independent countries
whose social and economic conditions are at a less advanced stage than
the stage reached by the other sections of the national community, and
whose status is regulated wholly or partially by their own customs or
traditions or by special laws or regulations;
(b) members of tribal or semi-tribal populations in independent countries
which are regarded as indigenous on account of their descent from the
populations which inhabited the country, or a geographical region to
which the country belongs, at the time of conquest or colonisation and
which, irrespective of their legal status, live more in conformity with the
social, economic and cultural institutions of that time than with the
institutions of the nation to which they belong.”
• Russian Federation gives special status and protection to groups with
less than 50,000 members eg Nenets c41,000, Evenki c30,000 (21,000 in
Sakha Autonomous Republic) but not Sakha (Yakut) 466,500
Yamal-Nenets Autonomous Okrug: Direct compensation for
pipeline building – principles for compensation
• Compensation varies according to the value of the economic losses from
destruction, alienation, degradation or burden.
• Compensation according to geo-botanic characteristics, nature and duration of
external influences (such as the building process and the industrial exploitation
period), the kind of external organizations, industrial and other activities and
the character and intensity of its influence on the built environment.
• The calculation of the external stress on land sites according to the regional and
local characteristics.
• The use of the average annual gross revenue per hectare of land as the basis for
estimating losses.
• The use of geo-botanical contour maps as the basis for defining the
characteristics of land .
• The calculation of losses separately for every specified site and different time
periods of building and exploitation activities of industrial and support
• The calculation of losses separately for all the types of activities of the
indigenous population activities on the specified land sites according to an
officially approved list of 13 indigenous traditional activities, such as animalhusbandry (reindeer-breeding, horse-breeding, etc.), animal-husbandry
products processing, fur farming, dog-breeding, fur trading, sea and river
fishing, local market gardening, and medicinal herb collecting.
• Unresolved issue of native land claims from 1867 US purchase
from Russia – who are the “uncivilised native tribes” referred
to in Treaty?
• 1968 Prudhoe Bay oilfield on land owned by State of Alaska but
need for export to ice-free port by pipeline across land owned
or claimed by indigenous populations
• Alaska Native Claims Settlement Act 1971 – US extinguished
land claims, granted 44 million acres to native corporations and
paid them $962.5m
• 13 regional corporations – own surface and sub-surface rights
• 229 village corporations – own surface rights
• Native corporations are for-profit organisations – can sell and
mortgage land – can go bankrupt
Alaskan Native Corporations – big
Owned by 11,000 Iñupiat Eskimo shareholders, living mainly in
eight villages on Alaska’s North Slope
5 million acres with oil, gas, coal and other minerals
Revenues $1,945 million in 2009, $163.5 million for shareholders
10,000 employees
Construction, energy services, government contracting, financial
services, hotels, petroleum refining
Operates outside Alaska eg Gulf States
Current and potential development of
Mackenzie Basin
1789 Alexander Mackenzie reports oil in Mackenzie Delta
1920 wildcat strike Fort Norman leads to oil for local demand and military
Potential export route from Prudhoe Bay
Historic approach to development on indigenous
peoples’ lands in Canada: Moose Lake, Manitoba
• Moose Lake in Northern Manitoba on the
Saskatchewan River Delta, populated by Cree and
• 1963-4 two-thirds of reserve flooded for Grand
Rapids hydro dam - Population had to move
• Loss of farmland used for grain, cattle and fur
farming – fur farming produced $150,000 pa
• Loss of hunting and trapping land and commercial
duck shooting ($207,000 pa)
• Loss of commercial fishery
• Compensation $10,000
• Exposure to pollutants through food chain – mercury
form pulp mills, uranium
• Destruction of local society and creation of social
Changing attitudes in Canada
• Calder v the Attorney General of British Columbia (1973) ruled
that Indian title was a legal right independent of any form of
enactment – not extinguished by colonisation.
• 1977 Berger Inquiry: Northern Frontier Northern Homeland: The
Report of the Mackenzie Valley Pipeline Inquiry
– Conflict of interest between businesses and aboriginal groups
– Impossible to impose conditions on pipeline construction to protect the
– Unlike transitory European population, indigenous population could not
move easily to other parts of Canada
– Proposed moratorium on development until the native land claims had
been resolved ie indigenous population could then determine their own
• 1982 Constitution Act reaffirmed aboriginal and treaty rights
• Canadian Government’s Comprehensive Land Settlement process
Opening up the Mackenzie Valley
• Renewed interest after 2000 cue to rise in price
of natural gas
• Substantial progress on settlement of land claims
in area –
Inuvialuit final agreement 1984 & 1987
Gwich’in comprehensive land agreement 1992
Sahtu 1993
Dehcho agreement in principle 2007
• 2001 Mackenzie Valley Aboriginal Pipeline
Corporation MoU with Imperial Oil, Connoco
Phillips, Shell and Exxon – 2003 full participant
with 33.3% share of consortium
Alternative approaches to developing oil-gas
• Russian Federation - compensation to officially
recognised indigenous juridical bodies for loss of
sites in recognised tenure used for recognised
traditional activities
• North America – land settlement claims give
indigenous population ownership rights (surface or
surface & sub-surface) – can negotiate with oil/gas
companies, including preferential sub-contracts.
• Alaskan model – for-profit native corporations
able to diversify but can go bankrupt
Which model offers better potential?
• No return to nomadic farming/ hunting when
oil/gas runs out if environment degraded
• Can alternative employment be found for people
who are nomadic farmers/ hunters if
environment that supported them is degraded?
• Should indigenous population share in oil/gas
wealth? If so in what proportion to wider society?
• To what extent should government’s permit
indigenous population to determine their own
futures, including permitting mutually-owned
native corporations to go bankrupt?

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