The sponsor has presented plans to address these issues to ensure that both OAO Novatek Corporate operations and specifically the YNG project will, upon implementation of the specific agreed measures, comply with appropriate environmental and social requirements. For OAO Novatek corporate operations these will be: the host country laws and regulations; Novatek Company Policy defining applicable standards, any new projects will comply with applicable IFC environment and social policies; and the applicable IFC environmental, health and safety guidelines. YNG operations will comply with applicable IFC environment and social policies; and the applicable IFC environmental, health and safety guidelines.
In addition the sponsor will amend its existing Environmental, Social, Health and Safety Policy to include a commitment to meet applicable IFC Policies & Guidelines as of December 2003 for all new developments after the date of IFC’s investment. The Policy contains the Sponsors commitment to implementing a Corporate Environmental Management System in line with ISO 14001 standards and a corporate Occupational Health & Safety Management System in line with OHSAS 18001 standards. In parallel with these standards, Novatek will commit to meet Environmental & Social standards in line with international best practice throughout OAO Novatek operations. The sponsor is preparing Guidelines (in line with its stated Policy) for use by its subsidiary companies and contractors (through contract provisions) covering environmental and social management of these operations.
Since, the company operates in regions inhabited by indigenous people of Nenets descent, OAO Novatek has developed an Indigenous Peoples Development Plan (IPDP) based on World Bank Group standards for the YNG Project. The IPDP will be expanded to cover other Novatek operations where indigenous people are found.
The sponsor will undertake environmental, social, health & safety audits of selected subsidiaries during 2005 under Terms of Reference approved by IFC and will use consultants acceptable to IFC. The sponsor has committed to revise as appropriate the Environmental & Social Action Plans to implement any recommendations arising from the audits and which are necessary to achieve compliance with Company Policy. For any new projects, appropriate environmental studies will be undertaken including full Environmental & Social Impact Assessments for any IFC Category A projects and consultation and disclosure of project details will be undertaken in accordance with IFC policies. Depending on whether any substantive mitigation measures are recommended by the audits, the company commits, as appropriate, to an independent compliance audit, on completion of such mitigation measures.
To ensure compliance with international standards, OAO Novatek will complete a Safety and Operability Study of YNG and selected other OAO Novatek facilities, including operations, workshops, support services, and transport.
To ensure that Novatek has the internal capacity to manage all the above processes, the company has committed to employ a Corporate Environmental and Social Coordinator with international experience. The key roles of this post would be to build staff knowledge and to ensure co-ordination between Environment, Occupational Health & Safety and Social functions and between OAO Novatek and its subsidiaries.
With respect to the specific YNG project financing, information about how the Sponsor will address potential impacts is summarized in the paragraphs that follow. Further information is provided in the attached documentation.
- Prior land use
The license territory of YNG covers an area of about 290 km2, but the company intensively uses on a small part of it (75 hectares). The company has the right of exploitation until 2020. Future development (beyond the planned 9 bcm/y gas production) could extend Yurkharovneftegaz production activities to the territory of the Tazovskiy Administrative Region.
Historically, land use consisted almost exclusively of reindeer herding and seasonal fishing. Purovsky (based in Samburg), an agricultural collective enterprise (‘sovhoz’), used the land inside the field for summer pasturage. Other, independent, herders may have used the area, but this is an area that the company will research and try to identify if others have used the land. Novatek pays rent to the Tazovskiy regional government and YNG pays rent to the regional government in Nadym and compensation to the agricultural collective for income losses resulting from the field operations. The compensation is based on standards of compensation established by Russian law, combined with further negotiation among the relevant parties.
The Yurkharovskoye field has inherited machinery and buildings associated with exploration and development activities dating back to the 1970s. The EIA for the project identified some pre-existing oil contamination in both water and soil in the YNG operational area. Today’s YNG operations use a relatively small area for gas field development, since the drilling is directional. The field can be accessed by land only during the winter, when ice roads are created. Pipelines from the wells to the main arterial pipelines are buried.
- Indigenous peoples
Reindeer herders and fishers use the land contained within the exploration license area. These people are almost exclusively of Nenets descent. Nenets are recognized under Russian legislation as one of the indigenous groups who are small in numbers and thus subject to special consideration. An assessment of the scale, nature and geography of Yurkharovneftegaz activities, both current and future, led to the conclusion, that the company does not currently produce major problems for the local indigenous people. Unused parts of the licensed territories are accessible for reindeer breeding. However, the company pays rent and compensation for all the territory it uses. In addition to the rent and compensation paid to the regional governments and the agricultural enterprise, the company also supports the local branches of the indigenous organization, Yamal for Descendents. Transport infrastructure does not create barriers for the migration of reindeer. The 54 km gas and condensate pipelines from the field to main pipes, which partially cross the territory of Purov region, are buried at the depth of 1.5 – 2 meters.
Nevertheless, Yurkharovneftegas provides substantial and constantly growing help to IP through various channels. IFC required the preparation of an Indigenous Peoples Development Plan (IPDP), which is attached. The main purpose of the IPDP is to propose ways in which the company’s existing programs for the local Nenets may be more sustainable, efficient, and useful. Under the IPDP, the company will be focusing its attention on the underserved indigenous people in and surrounding its operations. In particular, the company will work more closely with the nomadic reindeer herders, who currently do not have full access to services because such services are typically targeting indigenous people in the settled, non-migratory communities.
Potential negative impacts might be connected with larger scales of production and subsequent development phases of the field. Because of the reserves’ location under the waters of Tazov Bay, YNG will continue to maintain a small footprint using directional drilling. If it decides to use artificial islands, or create other substantial impacts in Tazov Bay, the company will prepare an environmental and social impact assessment that considers the effects on the ecosystem functions of the Bay, and any potential impacts on the fisheries. The IPDP also identifies what additional measures the company will need to undertake to mitigate and compensate for any unavoidable impacts to indigenous livelihoods.
- Gas field transport, construction and operation in permafrost and ice-covered areas
Due to the isolated nature of the company’s field, a large proportion of transport needs are satisfied through the use of helicopters. During the summer months, the area is inaccessible by road, until the ground and waters are frozen enough to create winter, ice roads. There is a general prohibition on driving away from these roads to avoid creating thermo-karsting. The Safety & Operability Study will include helicopter and road transport.
- Hazardous waste management
The operation generates 3,340 tonnes of drilling wastes and approximately 42 tonnes of other waste per year. The drilling mud used is water-based, in line with international practice but the mud is still treated as a hazardous waste in Russia. The amount of drilling mud to be produced by YNG has been calculated to about 50,000 tonnes in the field’s lifespan.
An engineered disposal facility has been constructed for this drilling mud. The area of the site is 11 ha in six twin sludge pits with the depth of 2 m each and cell sizes of 25 x 35 m. The area has a liner consisting of impermeable clay with a 0.5 m layer of heavy loam. The landfill has a surrounding bank to prevent spillage. Drainage trenches and bunds are provided for water control.
A significant part of the water-based mud is reused. Cutting re-injection is the permanent onsite disposal method that fully complies with federal and regional requirements. Centrifuges are used for mud processing. This equipment significantly reduces total fluid cost and limits waste disposal volumes.
Small quantities of other hazardous wastes (e.g., oil waste) are stored in special containers on site prior to removal by licensed contractors.
- Liquid and solid waste management
The EIA for the project identified some pre-existing oil contamination in both water and soil in the YNG operational area. However, YNG is carrying out continuing monitoring of the site, IFC is requiring that the monitoring program increase in frequency and that YNG ensures that its operations do not contribute to the existing localized contamination levels, a legacy of previous exploration activities. On an ongoing basis, YNG will survey its license area for locations with soil or water contamination, immobilize the contamination as feasible, and ensure that such areas are mapped and well marked to ensure they are not inadvertently used. Where feasible, YNG will remediate areas where oil contamination can be removed.
All liquid wastes, including process and domestic, are collected into a single treatment center. The treated water is then disposed of by flaring. The company will monitor the contents of the treated wastewater so that elements, such as heavy metals, that may survive flaring, will not exceed IFC standards for wastewater released to surface waters.
A landfill for solid domestic wastes with an area of 1.2 ha and a capacity of 12,000 m3 has been constructed. It is a 2 m deep pit, with a width of about 90 m and length of 150 m. The base and sides have a clay layer (thickness 0.3 m) and a liner. IFC suggested that the landfill is fenced off and routinely covered with soil to prevent birds and animals from feeding in it.
- Air emissions
Air emissions from the project are small, however, the existing state approved monitoring program will be extended to include VOC’s H2S and NOX to enable verification of compliance with World Bank Guidelines.
- Emergency Response Plans
Emergency Response Plans are a critical element of a gas project. YNG will develop an integrated Emergency Response Plan for its operations that provides a response manual for all foreseeable events. Drills and training integral to this will be drills and training exercises.
- Reclamation and closure
Whilst YNG is envisaged to be a long-life project, rehabilitation of disturbed areas or areas that are no longer operational will be carried out on an ongoing basis.
