August 5, 2021

Oil spill in Russia: Vladimir Potanin promises to fix everything

According to a company statement, Vladimir Potanin (Russia’s biggest fortune), a nickel and palladium mining and processing giant, had a “frank” conversation with Russian President Vladimir Putin about the leak. Massive fuel in the Ambarnaya River at the end of last week.

The billionaire has found himself in the President’s sights as Russia delegates the cost and logistics of pollution control to the industrial giant responsible for the diesel leak. The damage was caused when a reservoir collapsed at a power station outside the northern city of Norilsk. The nearby river found itself inundated.

Since the incident was announced last week, the Russian president has barely concealed his frustration after a subsidiary of Norilsk Nickel (owned by the billionaire) dragged its feet to reveal details about the 21,000 tonnes of diesel spilled. The Kremlin was reportedly not notified and learned the news through images of the now red river shared online.

A floating dam is installed to limit the spread of oil pollution following a massive fuel leak into the Ambarnaya River outside of Norilsk on June 10. Source: Getty images.

In what the Moscow Times describes as an “unusually harsh reproach” broadcast on Russian television, Vladimir Putin asks Sergei Lipin, head of a fuel subsidiary of Norilsk Nickel, NTEK, “Why do government agencies learn about them? made only two days later? Are we going to be informed of critical situations on social networks? “

The Russian president added, “Are you pretty healthy there? In remarks which may be interpreted in several ways. Forbes Russia reported that the chief engineer of the electro-thermal power plant owned by Norilsk Nickel and the manager were detained and suspected of violating environmental regulations. They could face five years in prison.

Having declared a state of emergency, the Russian president is carefully monitoring the measures taken to rectify the situation and limit the damage from the oil spill.

In a statement released Monday evening, Vladimir Potanin said his company had “mobilized” its best elements and promised to fully fund the clean-up operation in order to bring the ecosystem back to normal. “I’m just telling you as an individual who takes it to heart and not as a businessman,” he says.

What happened ?

The crisis started when a diesel tank suddenly leaked due to the melting of the permafrost. The BBC Weather Service reported temperatures in the Arctic Circle reaching a “staggering 30 ° C” this week. This subsequently caused the permafrost to thaw, which had remained at 0 ° C (32 ° F) or less until now. A large number of industrial equipment was built on these areas in Russia.

This spill is considered by the Russian environmental party as one of the worst in the history of the Arctic, while in the United Kingdom, Frédéric Coulon, professor of environmental chemistry and microbiology at Cranfield University, compares the disaster to that of Exxon Valdez (1989) in Alaska.

Coulon told Forbes that it is very difficult to assess the depollution of an oil spill if a number of factors are not controlled, in particular, the type of oil that he describes in this case as “extremely mobile”. And the “physical, biological and economic characterization of the location of the leak, the climatic conditions, the quantity spilled and the rate of the spill, the time of year and the effectiveness of the remediation strategy”.

However, Coulon goes on to say that other fuel leaks can be used as an indicator of comparison. The Exxon Valdez tide, for example, when an Exxon Shipping Co. oil tanker bound for Long Beach, Calif., Hit Bligh Reef in Prince William Sound in 1989, near Alaska, spilling 37 000 metric tonnes of crude oil, costing Exxon a whopping $ 4.3 billion.

According to Mark A. Cohen in a 2010 study A Taxonomy of Oil Spill Costsclean-up costs of $ 2.1 billion and the “civil / criminal agreement” in the United States and Alaska of “at least $ 900 million” accounted for the largest share of the total of 4 , $ 3 billion.

Forbes Russia reports that Vladimir Potanin has spoken to the Russian President about the total sum of the estimated damage costs worth “billions and billions… 10 billion or more… we will spend as much as necessary,” he said. However, RUB 10 billion is slightly over $ 145 million, and sounds somewhat optimistic even if it rules out possible fines.

According to Forbes’ real-time billionaire list, just one day was enough to drop Vladimir Potanin’s estimated net worth by $ 1.6 billion. When the scale of the disaster was revealed, the value fell from $ 26.5 billion on June 3 to $ 24.9 billion the next day following market reactions.

Vladimir Poutine
Russian President Vladimir Putin chairs a meeting on the consequences of a fuel leak in the Krasnoyarsk region, by teleconference. Source: Getty images.

Vladimir Potanin said Norilsk will fully fund the cleanup operations and bring the ecosystem back to normal. The oligarch, now worth $ 25.1 billion, is well known alongside Mikhail Fridman. The latter are among the economic leaders able to have better managed the transition from President Boris Yeltsin to Vladimir Putin and the industrial revolt following the beginning of this century. As a result, his company flourished. Its main asset remains the 35% of Norilsk Nickel, one of the world’s largest producers of refined nickel and palladium.

At the start of the coronavirus pandemic in April, the Russian billionaire acted swiftly by announcing a series of positive plans to help Russia with the challenges it was facing. His foundation gave around 13.1 billion dollars (1 billion RUB) to support NGOs. For its part, Norilsk Nickel pledged to pay 142 million dollars (10.5 billion RUB) to finance the purchase of medical equipment, drugs and personal protective equipment (PPE) for establishments of health.

However, events in Siberia could still place the billionaire in direct confrontation with the Kremlin despite his mistrust when business and politics collide. Speaking of the time (in 1996) when he served as deputy prime minister, Vladimir Potanin told the Financial Times in 2018, “I understood that we can never convert economic power into political power. If you try it, you will die ”.

Article translated from Forbes US – Author: David Dawkins

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