Soviet ‘Greens’ Force Delays in Big Oxy Project
American petrochemical companies, already beset by environmentalists at home, are finding that even the Reds in the Soviet Union are getting greener. Last week, Occidental Petroleum confirmed that it put on hold, for at least a year, a joint venture to build a chemical plant in the Ukrainian town of Kalush, 250 miles southwest of Kiev.
Sandra P. Kroeger, a spokeswoman for Occidental Chemical Corp., declined to discuss reasons for the suspension. But the Natural Resources Defense Council, an American environmental advocacy group, said the delay was prompted by outcry from Soviet citizens and groups who questioned the project’s effect on the environment.
The delay is perhaps the most visible example of grass-roots “green"--or environmental--opposition that has stalled a deal between a foreign company and the central government. But it probably won’t be the last, trade experts said.
Foreign companies “should hold themselves to even higher environmental standards abroad because of the difficult situation . . . and because these are global issues that can turn into global problems,” Svyatoslav Zabelin, spokesman for the non-government environmental group Socio-Ecological Union, said in a telephone interview from Moscow.
The Natural Resources Defense Council is more blunt: No longer can American and other Western companies hold the attitude that the Soviet Union is an easy place to “dump” environmentally hazardous projects.
Occidental’s decision to delay its plant comes at a time when Western petrochemical companies are considering several projects to tap the Soviet Union’s abundant natural resources. At the same time, Soviet officials are believed eager to win Western capital to upgrade an aging and antiquated petrochemical industry.
“Joint ventures are kind of the fashion of the day,” said Susan Lewenz, Soviet desk officer for the U.S. Commerce Department.
But a number of substantial projects have run into environmental problems lately.
* One of the larger Soviet joint ventures has already come under scrutiny by local environmentalists. Combustion Engineering Inc., an American unit of Swiss-based Asea Brown Boveri, signed a deal to build a $2-billion petrochemical complex in the central Soviet town of Tobolsk, in partnership with Finland’s Neste Corp. and the Soviet government. That deal was reportedly scaled back after environmental complaints.
* Chevron is entering the third year of talks with Soviet officials on a joint venture to develop oil and gas in the Caspian Sea area, with no agreement in sight. Part of the problem is the glacial nature of Soviet bureaucracy. But environmental issues also take up a lot of time. “There’s a great deal of interest in the Soviet Union about environmental protection and being more careful with the environment than in the past, and that’s been one of the issues Chevron has been asked to explain,” said spokesman Larry Shushan.
* Environmental groups also have stalled hotel projects with Western partners in Moscow and Leningrad, said Jeffrey A. Burt, a Soviet trade specialist and Washington lawyer.
* Occidental itself plans a second petrochemical complex near the Tengiz oil field by the Caspian Sea in a venture with Italian, Japanese and Soviet partners. Kroeger would not speculate on how the Kalush setback would affect the Tengiz project.
The Soviet Union’s burgeoning green movement is part of the fallout of glasnost and perestroika , which have increased the power of local and regional officials at the same time that environmental concerns received heightened urgency in the aftermath of the Chernobyl nuclear power plant disaster, trade officials said. Local officials also are motivated by lax governmental controls in the past that resulted in heavy environmental damage in some areas.
“The government had a lot of opportunities that they haven’t taken to speak out against the difficult environmental situations,” Zabelin said, “and, therefore, there is the impression among environmentalists that (the government) is basically living for the day and not looking forward . . . and that only citizen movements can really make a change in the future of the society in the Soviet Union.”
Industry officials deny that they view the Soviet Union as an environmental dumping ground, and a Soviet trade official denied that the government gives short shrift to environmental concerns in pursuing Western partners. “The joint-venture projects that are considered in the Soviet Union have to satisfy demands concerning the environment,” said Alexander Yakovlev, deputy trade minister of the Soviet Union in Washington. He declined to discuss the Kalush project specifically.
In Kalush, not even Occidental Chairman Armand Hammer’s long-time relationship with Soviet officials was enough to overcome local environmental resistance to the “Arnica” joint venture with the Soviet government.
In dealing with Occidental, Zabelin’s group, which encompasses about 200 regional environmental groups, got help from the Natural Resources Defense Council in Washington, said Kristen Suokko, the council’s Soviet exchange coordinator.
Occidental officials maintain that any plant that it builds abroad will meet or exceed environmental regulations in either the United States or the host country, whichever are stricter. Even the Natural Resources Defense Council concedes that there is no link between the proposed Occidental Kalush plant and toxic emissions. But, Suokko said, any new development should take into account environmental damage already done.
Zabelin said severe environmental problems already beset the Kalush area where the joint venture plans to build a $200-million polyvinyl chloride plant as part of the existing Chlorvinyl complex.