English translation from the official periodical of RAIPON “Мир коренных народов - живая арктика” (Indigenous Peoples’ World - Living Arctic) No. 14, 2004

Letter to LUKoil

18 December 2003, Ref. No. 495

To: V.Yu. Alekperov, President, LUKoil Company

Copy to: S.N. Kharyuchi, President, Association of Indigenous Peoples of the North (RAIPON)

Dear Vagit Yusufovich:

The Association of Nenets People Yasavey is appealing to you with request to clarify the relations between the Association Yasavey and the affiliated divisions of your Company. We hope that this appeal would contribute to sort out the situation.

As you are aware, a significant effort was carried out during the period of March 2001 – May 2003 to establish legitimate and civil relations between indigenous peoples and oil companies in the Nenets Autonomous Okrug. The Association Yasavey was the initiator of this process while a non-commercial organisation – the Union of Geologists and Oilmen of the North became its partner.

Unfortunately, however, some events described in our letter to you of 9 June 2003 (ref. No. 234) took place in May 2003 in connection with the reorganisation of your Company’s divisions. We insisted in that letter on public explanation of the non-fulfillment of contract obligations by the Archangelskgeoldobycha Company with regard to financing the medical and cultural services for nomad reindeer herders and suggested to take measures to prevent negative consequences.

At the same time, S.N. Kharyuchi, President of RAIPON, appealed to you in his letter of 13 June 2003 (ref. No. 249) to deal with this subject, but we have not received your answer to either of the letters as of now.

Unfortunately, due to the non-fulfillment of its contract obligations by the Archangelskgeoldobycha open joint-stock company, a full-scale tour of inspection of reindeer breeding brigades (teams) in the Kanin Peninsula was wrecked. A good deal of what could have been achieved was not accomplished, while there were neither any actions nor any explanations on the part of the above company to follow up – with the exception of assistance rendered by the Naryanmarneftegaz Company in the form of a special helicopter flight to the Kanin Peninsula. That flight did take place, although it took about three months to solve its financial matters.

We have to state today that all former agreements and adjusted relations have practically ceased to be effective. Once again we find ourselves at the initial stage of our interactions, and it looks like everything has to start from the very beginning. The results of our recent efforts carried out in Naryan-Mar in early December 2003, when our legislative proposals on legitimate adjustment of interactions between extractive companies and indigenous peoples in the field of nature use were either ignored by the majority of the companies or misunderstood by those agreeing to listen to us, have proved that. It happened so despite the fact that these proposals were based on both the previously reached agreements and the experience gained in regulating such relations in the Khanty-Mansi and Yamalo-Nenets Autonomous Okrugs where your Company also operates.

Unfortunately, what you said at the meeting with the delegation of the Association Yasavey in April 2001 about the work with indigenous population taking priority for your attention, has not found its confirmation in the present situation.

Meanwhile, the oil development rates are gaining momentum, and documents to dovetail land allocation decisions are now coming to us from a new company. More and more new areas are allocated while methods and technologies used in the development of these areas are practically as old as they used to be. Great confusion occurred when the involved enterprises, constructed of subsidiaries of the Archangelskgeoldobycha open joint-stock company, now were handed over to the “Naryanmarneftegaz” limited liability company. The results of this confusion – connected with allocation of liability – were discovered during the inspection tours of the Commission on Land Allocation with representatives from us and reindeer-breeding farms who took part in these flights to the locations. There has been a lot of anxiety and concern about the situation in the area were your Company operates. The reindeer-breeding farm Yerv, well known to you, has approached the Association Yasavey with a request to carry out a social impact evaluation, i.e. to assess the impact deriving from all the oil development enterprises operating on their pastures, which are areas of traditional economic activities and the primordial lands of indigenous people. The plans to build a permanent road from Pizhma to Varandey across the territory of three reindeer-breeding farms – Yerv, the Agro-production Cooperative Izhemskiy Olenevod, and the APC Put’ Il’yicha – have caused special anxiety. The construction of this road would lead to irreversible consequences for the reindeer herders. There is also a great concern among reindeer herders of the Yerv farm about the non-fulfillment of the earlier signed contracts.

It must be explicitly mentioned that economic activities, which have nothing to do with traditional nature use on the lands of these farms, are subject to regulation by the Federal Law “On Territories of Traditional Nature Use of Indigenous Small-numbered Peoples of the North”, since the lands of these farms are identified by the administration of NAO as Territories of Traditional Nature Use. In accordance with the Federal Law “On Territories of Traditional Nature …”, these lands have the status of “specially protected natural territories” (Article 5), whose regime of use is determined by the Land Code of the Russian Federation (Article 95).

All actions undertaken today on the territories of these farms violate the above-mentioned federal and Okrug legislation. Surely, it has relevance not only to your Company, but also to other users of mineral resources.

We understand that efficient legislative implementation depends to a large extent on the combined efforts of the Okrug authorities and federal ministries and departments. Today, the Association Yasavey, supported RAIPON, is exerting every effort to solve the problems of nature use by indigenous peoples at the legislative level. We have prepared two Okrug draft laws “On Social Impact Evaluation” and on the establishment of a special legal regime for the use of land in the localities of traditional residence and economic activities of Northern indigenous peoples in the NAO for their subsequent consideration and passing. They will be submitted to the Okrug Assembly of deputies in the nearest future.

In view of the above, the Association Yasavey informs you of the following:

1.    The Association Yasavey is to suspend consideration and coordination of all the documents coming from your Company, including those submitted by your subsidiary structures, until a satisfactory clarification is obtained on the issues raised in the abovementioned letters and the present appeal.

2.    Renewal of consideration and coordination of the documents, including those from the Naryanmarneftegaz Company, will be possible only after the receipt of sufficient guarantees from the top management of the LUKoil Company about non-admissibility of such situations in future. As of now, unfortunately, there are no guarantees that yet another reorganisation of the LUKoil Company’s affiliated enterprises would not destroy the prevailing agreements. The passing of the above Okrug laws is vital just for the non-admissibility of such situations and for legitimate dovetailing of nature use problems.

We count on your understanding of the arising situation and hope that you, as the President of the Company, will take every effort to remove the current misunderstandings. We also hope that your Company will take the required measures to organise its operations with due observance of Russian legislation and universally accepted international principles and standards.

V.V. Peskov, President of the Association of the Nenets People Yasavey