KAZAKHSTAN: ARTICLES ACCUSE OIL COMPANIES OF CAUSING

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SUBJECT: KAZAKHSTAN: ARTICLES ACCUSE OIL COMPANIES OF CAUSING
ENVIRONMENTAL DAMAGE TO CASPIAN REGION

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1. (U) Sensitive but unclassified. Not for public Internet.


2. (SBU) SUMMARY: On October 30, the Russian-language, independent
weekly newspaper "Svoboda Slova" launched a series of inflammatory
articles written by journalist Igor Larra called, "Defending the
Caspian." The paper has published three full-page articles to date,
each one accompanied by sensational headlines (e.g., "Caspian Sea -
or Dead Sea?" and "Dress Rehearsal for the Apocalypse") and
disturbing photographs (e.g., babies with deformities, a mushroom
cloud). Despite a low circulation of 85,000, "Svoboda Slova" is
popular among a politically-active segment of the population in
Kazakhstan and exerts some influence over public opinion. Linsi
Crain, Deputy Manager for Government and Public Affairs of
TengizChevrOil (TCO),and Richard Fritz, Public Relations Manager of
Agip Kazakhstan North Caspian Operating Company (KCO) provided post
with their reactions to the series of articles. END SUMMARY.

OCTOBER 30 ARTICLE LAUNCHES SENSATIONAL SERIES


3. (U) The October 30 article notes that Kazakhstan is "entirely
dependent" on oil and gas revenue and claims that international oil
consortia Tengizchevroil (TCO) and Agip Kazakhstan North Caspian
Operating Company (KCO) will produce 100 million tons of oil from
the Caspian shelf by 2015 and as a result produce 520,000 tons of
"dangerous waste," such as sulfur and hydrogen sulfide. The article
claims that extensive drilling has damaged the soil and water
resources of the Caspian region and alleges that there is
"practically not a single well" that meets environmental standards.


4. (U) Citing 2006 data from the Atyrau oblast Department for
Environmental Protection, the article claims the amount of
pollutants in the Ural River, including sulfates, iron, zinc, and
copper, has reached critical levels. "Everyone in the region is
sick without exception: people, livestock, fish, and plant life."
The article asserts that locals in the area are two to three times
more likely to suffer from liver, heart, and lung disease, citing a
report from the Institute for Social Health. According to the
article, from 1993 to 1994, the average life expectancy in the
village of Sarykamys -- located 15 kilometers from Tengiz -- has
dropped from 56 to 46 years and asks rhetorically, "Will TCO
relocate these villagers as well? How far will they have to go?"


5. (U) Under the heading, "Monster Ball," the article describes
cases of babies born with birth defects such as Down syndrome and
Hutchinson-Gilford Progeria (a rare rapid ageing disease) and claims
that an employee of TCO recently gave birth to stillborn Siamese
twins. The article directly blames "the intensive oil production"
in Atyrau oblast for these birth defects and declares that oil
production in the Caspian has had an "extremely negative influence
on the environment."

NOVEMBER 6 ARTICLE CONTINUES DIATRIBE


6. (U) "Svoboda Slova" continued its "Defending the Caspian" series
with a second installment in the November 6 issue. This article,
co-authored by Vitaliy Smirnov of the private enterprise Best
Business Asia and Makhambet Khakimov of the non-governmental
organization Caspian Defense, features a large drawing of a mushroom
cloud over the Caspian Sea, headlined with the phrase, "Tengiz and
Kashagan: A Disaster from God -- or from the Oil Business?" The
article says that more than 1,000 wells have been drilled in the
Caspian region and claims that some have been leaking oil into the
Caspian Sea and regional water table. The article expresses
particular concern about leaks from abandoned wells and cites
"official data" (no specific source is provided) that only 20 wells
of the 1,000 have been sealed and abandoned. Although the majority
of the wells were drilled during the Soviet era, the authors single
out the new wells drilled by TCO and KCO as the "most ,pMhIQ the

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authors claim that intensive oil exploration is slowly killing the
Caspian Sea and that drilling expansion will signal its death knell.
It claims that the 1986 explosion at well number 37 of the Tengiz
field killed hundreds of thousands of birds, had a dramatic, adverse
impact on the health of the population, and was no less a natural
disaster than the Chernobyl nuclear accident that happened that same
year. Another heading shouts, "Life Threatening!" and claims that
oil exploration is "killing every living thing in the region at this
very moment." Citing Dr. Muftakh Diarov, a member of Kazakhstan's
National Academy of Science and Director of the Atyrau Center for
Environmental Studies, the authors claim that Tengizchevroil
produces two to four kilograms of sulfur and other "dangerous waste"
for every ton of oil produced. They blame TCO's open-air sulfur
storage for irreparably damaging the environment and endangering the
lives of local citizens and wildlife.

DEFENSE RESTS WITH NOVEMBER 20 ARTICLE


8. (U) On November 20, "Svoboda Slova" published the third and
final installment of its project, "Defending the Caspian." The
article is the transcript of an interview with Dr. Diarov, who says
he fears that ongoing exploration for oil in the Caspian Sea will
release a "fire genie in a bottle that, sooner or later, will
explode and kill the entire north Caspian." Diarov claims that the
north Caspian region is prone to earthquakes and notes that much of
the drilling taking place occurs at very deep levels and under very
high pressure. In support, he cites Seismology Institute data
forecasting major earthquakes at 7.0 on the Richter scale in Atyrau
oblast, where both Kashagan and Tengiz are located. He warns that
"incompetent drilling at Kashagan could trigger a massive earthquake
and terrible fire." Diarov claims that none of the participants in
the "project of the century" have experience working under similar
environmental and geological conditions.


9. (U) Diarov despairs that the government of Kazakhstan will
support drilling and exploration until disaster strikes, blinded to
the danger by the revenue it receives from the rich subsoil
resources. However, he stops short of accusing the president of
complicity in this crime: "I have the distinct impression," he
said, "that President Nazarbayev simply is not aware of the true
danger of the coming ecological crisis. Someone must be keeping the
facts from him, because he reminded a group of foreign investors in
June that they should first and foremost take care of the Caspian
and guarantee its ecological health and stability." Diarov comes to
the conclusion that the citizens of Kazakhstan must take matters
into their own hands and rely on their own strength by raising
awareness of the environmental damage done to the Caspian region and
turning public opinion against further drilling.


10. (U) Under the headline, "Caspian Sea - or Dead Sea?," Diarov
predicts that the Caspian will experience a "complete degradation of
its ecosystem in 30 or 40 years." He claims that tens of millions
of birds will perish, entire species of fish will disappear, life
expectancy in the region will fall to 35 to 40 years, and the
psychological health of local residents will be at risk. Diarov
claims that his environmental research shows that as a direct result
of drilling for oil over the past 10 years, the frequency of blood
disease and related illnesses among those living in the Caspian
region is four times higher than the average levels for those in the
rest of Kazakhstan. Diarov is particularly distressed that oil
companies have conducted "disinformation campaigns" to sway public
opinion in their favor and convince them that their exploration
activities are not harmful to the Caspian environment. He dismisses
the companies' environmental monitoring as "unprofessional" and
claims that people do not have the real facts and therefore do not
know the real danger they are in. Ending on a cynical note, he
repeats an old Soviet proverb, "Whoever pays the piper, picks the
tune."

INTERNATIONAL OIL COMPANIES RESPOND TO ALLEGATIONS


11. (SBU) Linsi Crain, Deputy Manager for Government and Public
Affairs of TengizChevrOil (TCO),said TCO strongly disputes the

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"unfounded accusations" made by "Svoboda Slova" and offered a number
of facts and figures to rebut the charges. For example, according
to Crain, TCO has spent $1.8 billion on environmental projects over
the past nine years, including $680 million as a part of its
three-year Environmental Protection Plan adopted in 2007. TCO plans
to spend an additional $900 million on environmental protection
projects over the next three years.


12. (SBU) As a result of this investment, according to Crain, TCO
has reduced emissions by more than 50% from 2003 levels and has
reduced natural gas flaring by 12% per year over the past four
years. By the end of 2009, according to Crain, TCO will eliminate
all routine gas flaring. Crain also disputed the charge that TCO
accounts for more than two-thirds of all emissions for all
industries in Atyrau oblast. According to Crain, "Svoboda Slova"
based this figure on the seven largest stationary installations and
did not take into account emissions from hundreds of smaller
stationary sources or mobile sources within the oblast, which
produce more than 40,000 tons of waste each year.


13. (SBU) Crain also cited several ongoing studies by the World
Health Organization in partnership with Kazakhstani research
institutes on the state of public health in the Kulsary district of
Atyrau oblast. According to Crain, none of these studies
demonstrated any relationship between TCO emissions and the overall
health of the local population. Moreover, Crain told Energy Officer
that the Ministry of Environmental Protection endorsed the findings
of the Sulfur Coordination Council that sulfur produced and stored
by TCO has had "no significant impact" on the health of local
residents.


14. (SBU) Richard Fritz, Public Relations Manager of Agip KCO, the
consortium that operates the Kashagan oil field, also strongly
denied the allegations raised in the "Svoboda Slova" series. Fritz
said that Agip KCO has gone to great lengths to protect the Caspian
ecosystem and follows a strict, "zero discharge policy," under which
no waste water or runoff water is returned untreated to the Caspian
Sea. Fritz furthermore told Energy Officer that Agip KCO also
removes and safely disposes of the cuttings and drilling mud, in
accordance with Kazakhstan's environmental regulations. Fritz
admitted that Agip KCO has only spent 6% (approximately $3.25
million) of the funds budgeted for environmental protection, but he
explained that this was due to the local government's delayed
approval of the company's Environmental Protection Plan. Fritz said
once the plan is approved, Agip KCO will spend 100% of the funds
allocated for environmental protection.


15. (SBU) COMMENT: The "Svoboda Slova" series shows that
Kazakhstan's print media can be just as controversial, if not as
scandalous, as the tabloids sold in grocery-store checkout lines in
the United States. Indeed, it is not uncommon for
small-circulation, local newspapers to make populist accusations
against international companies in Kazakhstan. Regional governments
in Kazakhstan, which collect all of the revenue from environmental
fines of companies operating in their oblast, have been known to
pressure local newspapers to write investigative articles accusing
companies of violating environmental laws. However, it is unusual
for a well-established, national publication such as "Svoboda Slova"
to publish a multi-part series this inflammatory. Post has not
found any evidence that this series of articles was sponsored or
encouraged by other foreign government agencies. Nevertheless, the
stories continue and companies remain under attack, unfairly charged
and prosecuted in the court of public opinion. END COMMENT.

HOAGLAND