Norilsk Nickel fined US$2.1bn for Arctic oil spill

NORILSK Nickel has been fined US$2.1bn by Russian environmental watchdog Rosprirodnadzor for the damage done to waterways and soil following an oil spill in May.

Around 21,000 t of diesel leaked into the Ambarnaya and Daldykan rivers near Norilsk, Russia, on 29 May following the collapse of a storage tank at a power plant. It is believed that melting permafrost is the most likely cause of the collapse of the tank due to abnormally warm conditions in the Arctic.

Norilsk Nickel has been engaged in the cleanup, and reported that as of 6 July, 33,237 m³ of contaminated water and 185,102 t of contaminated soil had been removed in the area. Sergey Dyachenko, First Vice President and Chief Operating Officer, said: “We are working as part of an interregional commission set up by the government and staying in close touch with Rosprirodnadzor to develop and implement relevant site rehabilitation plans.”

However, Rosprirodnadzor has fined the company almost 148bn roubles (US$2.1bn) as “voluntary compensation” for the damages. According to The Financial Times, the fine is equivalent to around a third of Norilsk Nickel’s net profit for 2019. According to The Financial Times, Dmitry Kobylkin, Ecology Minister, said: “The scale of the damage to Arctic waterways is unprecedented. The fine is proportional to it. If you recall the Exxon Valdez disaster off the coast of Alaska, the fine for the damage was more than US$5bn.”

Norilsk Nickel contests the severity of the fine, saying that the figure had been calculated at the assumption of maximum damage and didn’t take into account the cleanup already occurring. The company also emphasised its commitment to fully cover the environmental cost.  

The spill is reported by local media to have reached Lake Pyasino, which is fed by the Ambarnaya and Daldykan rivers, after booms installed to contain the spill were broken by drifting ice. Greenpeace Russia has raised concerns that the true scale of the disaster is being covered up, after samples that it took from the Pyasina river – which flows out of the lake – to determine if the diesel will reach the Arctic ocean were confiscated before they could be tested by an independent laboratory.

Dmitry Groshkov, Director of WWF-Russia, wrote an open letter to Vladimir Potanin, President of Norilsk Nickel. “We expect a maximally open position and informing both about the causes and consequences of the accident, and about the measures taken. In the first days after the accident, we observed an attempt to hide what had happened. WWF-Russia experts, having received information about the scale of the accident from social networks, had to intervene and inform the Marine Rescue Service.”

“Such secrecy, as well as the provision of false information is unacceptable. Any delay in responding to a spill leads to significantly greater damage and complicates the management of the consequences. We suggest that you develop corporate regulations to inform all interested parties about incidents that have occurred.”

Groshkov also highlighted other lessons that the company should learn from the incident, such as having walling that can contain leaks – which in this case was not suitable or monitored – and having storage solutions for contaminated material already in place. WWF-Russia also advocated to move from oil fuels to LNG as a medium-term solution.