Esquire, November 1993

 

Risky Byeznyess

 

The vast oilfields of western Siberia once paid for the Soviet space programme and bankrolled Cuba. But today the Russian oil industry is falling apart amid one of the world’s worst ecological disasters. While western companies wait eagerly in the wings, the new Russians are playing the new game of “byeznyess” as former communist bosses attempt to carve up the action. But even if everybody is playing the game, as Edward Fox discovered, nobody seems to know the rules.

 

JUST WHEN I THOUGHT things couldn’t possibly get any worse, I received a fax beckoning me to Siberia. It was from someone I didn’t know, yet he seemed to know all about me.

 

“I’d like arrange [sic] your business tour to our region. I’ll be meeting you at the gangway of the plane or the “Intourist” waiting room of the local “Roschino” airport. I’m 180 cm tall, wear small black beard and spectacles. Yours sincerely, Vladimir Polischuk.

 

By “business tour”, he meant my proposal to investigate the oil industry in western Siberia, the largest on earth, producing more oil even than Saudi Arabia. He was writing from Tyumen, capital of Tyumen Oblast, a division of Siberia the size of western Europe, where 60 percent of the oil of what was once the Soviet Union is produced. His fax also listed the names and home telephone numbers of four interpreters, all female. If this had been a spy novel I would have called it a classic honey trap. I was fatally compromised from the start, it seemed.

 

Siberia covers one-sixth of the earth’s land surface. It contains every element in the period table in abundance, three of the world’s longest river systems, the world’s coldest place (where temperatures drop to minus 70 degrees centigrade, colder than either of the poles) and spans nine time zones. Yet in the southern part of Tyumen Oblast there are flamingoes.

 

But it’s not just a geography thing, it’s a state of mind. Heaven and hell can get lost in Siberia. In the Russian it is the heaven of an idealized wild frontier: infinite virgin forests full of bears and game birds, giant mushrooms and berries, where a man can wage a hard but honest contest against nature and survive ennobled, far away from the corrupting influence of the metropolis, and where native peoples still live a traditional way of life as reindeer herdsmen: making tents from their skin, castrating them with their teeth, and eating the jelly from their horns mixed with pine resin.

 

It’s better known for its versions of hell. Siberia was a land of imprisonment, exile and oblivion from Tsarist days; under Stalin, its penal character sharpened and increased to become the Gulag,  a deeper, darker and colder circle of hell, the slave economy in which millions were sacrificed to the industrial fantasies of a psychopath.

 

Hovering between these two extremes, like a kind of purgatory , was the Siberian oil industry. The vast oilfields of western Siberia were the Soviet Union's, now Russia's, greatest economic asset. They paid for the Soviet space programme and the invasion of Afghanistan; they bankrolled Cuba and Mozambique. Workers came from allover the Soviet Union, attracted by the "northern coefficient," which multiplied their salaries by 1.5 to 2.2 times the national average, to work in the grim oil cities of Tyumen Oblast.

 

Now the industry is falling apart, presenting (as one might put it in the optimistic language of a brochure) exciting opportunities for western investors wishing to exploit a geopolitical anomaly that is gaping wide open.

 

Hence my trip. In the words of countless unanswered faxes I sent to key figures in the industry there, I was exploring "the role of western investment and the industry's prospects for the future". I was playing the new Russian game of "byeznyess" (a game which everyone wants to play, but no one knows the rules), and so was Vladimir Polischuk. He had seen a fax I had sent someone else and taken it off his desk.

 

But since several other people were also interested in taking charge of my "business tour", all of them wanting to meet me at the airport, make hotel reservations, lay on interpreters, cars, drivers, and change money, I determined to keep my precise arrival time a secret, fearing they would all show up at once and fight over me. As for Vladimir Polischuk, I had no desire to walk around Tyumen airport with a tape measure, looking for someone who measured exactly 180cm in height. On the other hand, I was a human currency bomb. Hundreds of dollars in one and five-dollar bills, in crisp wads, were strapped to my person, and it would have been prudent to have someone meet me at the airport, to whisk me to safety. Still, I decided to risk it alone.

 

When I arrived in Tyumen it was the middle of the night, and the airport resembled one of Dante's gloomier ditches: dark, dilapidated and dirty, with a deep, gaping hole in front of it and wild dogs roaming around. Everyone looked like they had just got out of prison. Families waited for decades on hard benches, in half light, for planes that were not due for centuries. Back outside, the chrome grilles of the local taxis glittered like sharks' teeth. I chose to take my chances with one of them and it cost me fifteen dollars to get to my hotel.

 

The next day I set out for my first daylight glimpse of Siberia. On the broken sidewalks of downtown Tyumen, outside grand Soviet-era buildings, people sold little piles of vegetables and cigarettes and cheap manufactured goods from cardboard boxes. Economic historians will note that the natural successor to the system of communist central planning is the jumble sale.

 

By now I was ready to telephone Vladimir. He showed up at the hotel within ten minutes. As he bounced into the lobby, I recognized him from the description he had given in his fax. With his brisk air, snapping briefcase latches and sales-presentation smile, he obviously had the instinct needed to thrive in the new frontier of the market economy. He was almost intolerably pushy. He used to work, he told me, "in government", and was now either "Director, International Business Development, Western Siberian Finance Company (Open Type Joint-Stock)," or else "President, Aquamarine Ltd", depending on which business card he gave you.

 

Plainly, he wanted something from me as much as I wanted something from him. Although I was here on a business visa, exploring "the role of western investment and the industry's prospects for the future", I was really after something of mythic significance, somewhere out there in the wilds of Siberia was Russia's industrial heart of darkness: the monumental faucet from which flowed the treasure that had sustained the Soviet Union, but which was now broken and poisoning everything around it. (One could imagine it in terms of some dark Nenets legend: the pivot of the universe lay deep in the forest, where it had been guarded for a thousand years by two trolls named Marx and Lenin, but they had been scared away by a wolf who knocked the pivot over, creating chaos. Daylight turned into darkness, clouds into clouds of smoke, and lakes into pools of bitumen.) What he wanted I am not sure: possibly he thought it would be good for "business" to interact with a foreign journalist. So he treated me as if l were a potential client.

 

First, he took me to his office, where he made me change money. Then, after a tour of the town with one of his female interpreters, the three of us returned to my hotel room at his insistence to cement relations with a drink of my duty-free whisky. My room had not been cleaned, my clothes and toilet articles were strewn about, and there were only two glasses, forcing me to drink from the stopper of the water carafe, which was hollow, and two chairs, obliging Vladimir to sit on my unmade bed. But Vladimir was untroubled. He was immune to embarrassment, which gave him a considerable advantage.

 

He stood to propose a toast. "To your business trip!" he said. He belted back his Scotch in a single gulp. Then he proposed another. "To the lady!" The lady (who I suspect had been coerced into this by Vladimir) blushed politely, and Vladimir belted back his second shot. His eyes shrank and grew red and teary. Before he left he noted down my room number and the extension number of my telephone, like a detective conducting an investigation.

 

VLADIMIR TELEPHONED at nine o'clock sharp the following morning, and we spent the next two days visiting the oil chiefs ofT yumen in their offices. Vladimir had the run of the local House of Soviets and of the offices of Tyumenneftegas, a big state production association, one of the bureaucratic organizations of the Soviet oil industry whose job was simply to get oil out of the ground, and a major institution in Tyumen.

 

Western Siberia became the well-spring of the Soviet economy soon after the discovery of gigantic oilfields there in the 1960s. For years, the Soviet state bled the reserves of western Siberia, imposing higher and higher production quotas, which production associations like Tyumenneftegas were obliged to meet. At the same time, the state invested less and less in the industry, starving its own golden-egg-laying goose. The oil chiefs were under constant, grinding pressure from the Party to produce more and more oil, whatever the consequences, and this led them to cut corners dangerously, just for the sake of a decent night's sleep. The future didn't matter: all that mattered was meeting the expected quota.

 

One way of cutting corners was to pump oil, gas and water together through the pipeline network, cutting out the gas-oil separation stage. These elements together produced a sulphurous mixture which corroded and burst the pipelines, causing an estimated seven to 20 per cent of the oil extracted to leak into the ground. The oil chiefs' solution was to force up production by the same percentage to compensate for it, and in this way the quota would not be missed, and the oil chief could continue to lead a quiet life. Even now one million tons of oil leaks into the Ob River every year and the landscape around giant oilfields is disfigured by black lakes of pure oil. Not only did this approach encourage wasteful use of fuel in Soviet industry, which was allowed as much fuel as it wanted at negligible cost, it turned the infinite marshlands and virgin forests of western Siberia - the northern heaven of the Russian imagination -- into one of the world's worst environmental disaster areas.

 

It is important to remember that there are still many people who found happiness in such an arrangement. One example is the vice-president of the Association of Oilmen, Genadi Alpatov, whom we met in his office in the Tyumen House of Soviets. He received us amid the conventional trappings of power in Russia: a big, empty desk with an array of telephones. He was an old-fashioned warhorse of Soviet labour: wide, bald, in his fifties; a proud, faithful, bewildered man, the meaning of whose life had lately, after decades of certainty and sacrifice, turned into a jumble of meaninglessness. He recalled the bracing effect of the political discipline that upheld the Plans and Quotas like an old public schoolboy recalling the cold showers of his youth: "1 was never asked if l wanted to do something or not, I was ordered," he said with gusto. When the minister said sit down it was not convenient to stand!

 

"The Plan," he said, "was great and profound. We even planned how many needles we needed. But now our resources are depleted and a single mechanism called the USSR is ruined. Everything is changing, and we are proceeding to a market economy." This seemed like something sinful to him.

 

The oil industry looked after people, and it still does. It housed people and fed them. In the basement cafeteria of Tyumenneftegas, for example, where my lunch with Vladimir and the interpreter earlier that day had cost 241 roubles (18p), people bought fresh bread and fish, and in shops nearby got their shoes repaired, and bought clothing and tinned food.

 

People like Genadi Alpatov couldn't understand how it could be a good thing to produce less oil, just to make a profit. Russia already had everything it needed to revive its oil industry; it didn't need foreigners coming in and telling people how to do things, and sucking out the profit. This is what the oil chiefs of Tyumen really thought, and it is one reason Siberia will remain terra incognita to the big western oil companies for a long time to come. And since the demise of the Soviet Union, de facto control has passed from the ministries in Moscow into their hands. They are not just going to hand this power over for a fistful of dollars.

 

On my last night in Tyumen, Vladimir took me to the theatre. (Entertaining the client.) He hired a box and mobilized two English-speaking women, Tamara and Tania, to accompany us. A troupe from Moscow was performing a light comedy. Before the curtain rose, one of the actresses, a tall, graceful woman with the air of a Russian princess, took the stage to deliver a long address, which Tamara translated. "It is difficult for them to get work," Tamara said. "Their salaries have not been paid... Many of them have had heart attacks and nervous diseases."

 

"That's awful," I said.

 

The actress began to cough violently and turn red. I thought she had come down with something too, and was about to drop dead on stage. She apologized and continued her account of the troupe's difficulties. "She says they must find private sponsorship now. In Tyumen they have been sponsored by several firms, including Tyumennefte- gas," Tamara explained. The audience gave the actress a thundering round of applause before she slipped into the wings, returning later as a tipsy spinster in the last act. The play was an indifferent domestic comedy, about a disconsolate widower whose daughter and son-in-law were trying to find him a new mate. The rain began to fall shortly after the performance began and fell heavily through holes in the ceiling of the theatre, onto the stage and into the auditorium, obliging several members of the audience to find new seats.

 

VLADIMIR HAD W ANTED to come with me to my next destination, the oil city of Nizhnevartovsk, 650km to the northeast, in the Khanti-Mansisk Autonomous Okruk, as it is known, and had been disappointed to learn that I only planned to buy one ticket for the Aeroflot flight, and a one-way ticket at that. But Vladimir's skills

would be of no use to me out there. He just wouldn't understand. In Nizhnevartovsk, I would be in the heart of the oilfields, and one step closer to the mythical, terrible Great Faucet of the Siberian wilderness.

                       

Because of its economic and strategic significance, Nizhnevartovsk was previously a closed city, even to Soviet citizens. It had been rapidly built in the late Sixties for the sole purpose of exploiting the Samotlor oilfield. Like most cities of the extreme north, it was established for the temporary housing of people who had come from elsewhere to get as much as possible out of the land in the shortest possible time; what the place looked like hardly mattered. The sight of it, as one approaches it by air in a beat-up Aeroflot plane, would be a good way of evoking a bad hangover to someone who doesn't drink. Yet it has a population of a quarter of a million.

 

Awaiting me at the airport was a gloomy-looking young man holding a piece of paper with the name "Eurosov" written on it. He looked extremely doubtful that this piece of paper would have the effect of conjuring me out of the crowd of unshaven, worn-out looking men, carrying duffel bags over their shoulders like soldiers heading for the front, who straggled across the tarmac from the plane. He wore a dark, shiny double-breasted suit, thick glasses with smoke-coloured lenses, white socks and black Gucci-style loafers. This was Igor, my new minder. He worked for Sinco, the Siberian Oil Company, which describes itself as the first entirely private oil company in Russia since pre-revolutionary days. Eurosov is its London-based investment company.

 

Sinco is producing oil in a virgin site 35km south of Nizhnevartovsk, in the heart of the western Siberian oil-producing region, on land carved out of the forest. It has a license to develop an area with estimated reserves of 1.7 billion barrels, making it --simply in terms of reserves -- the tenth-largest oil company in the world. Sinco got this concession because its president, Sergei Shafranik, is the brother of Yuri Shafranik, who used to be governor of Tyumen Oblast and is now Minister for Fuel and Energy. The secret for western investors is to make a deal with the right person.

 

Nizhnevartovsk is a company town, dominated by Nizhnevartovskneftegas, the biggest production association in Siberia, which owns two telephone networks, a third of the apartment buildings, shops, a daily newspaper. Its chief executive, Viktor Palii, is the most powerful and conservative of the oil generals; Yeltsin and, before him, Gorbachev, would consult him when they wanted to know the opinion of big oil in Siberia. Its workforce of 53,500 represents about a fifth of the total population

of the town. Yet Nizhnevartovskneftegas has shown the steepest decline in oil output of any Siberian production association. In 1992 it produced 33 million tons of oil, compared to 132 million tons in 1987.

 

The city is like a single piece of heavy machinery. Electricity pylons march down the long, straight boulevards, past monolithic apartment buildings. Hot water for domestic and industrial use, and steam for heating, are produced at three boiling water plants, from which ugly silver pipes, patched up and with lagging peeling off them, snake all over the town, arching over entrances. The sidewalks are made of trampled mud, and you are always picking your way over big lumps of concrete with twisted iron rods protruding dangerously out of them.

 

On the horizon, looming clouds of black smoke rise up from fires in the Samotlor field, 30km north of the city. A local newspaper reported that at one clinic, pregnancies are down from 1,200 a year in the past to 500 this year. Mothers wheel large, pale, sickly children in pushchairs. An alarming proportion of babies are born blue.

 

Sinco put me up in a flat they rent in a nearby apartment block. The address was Flat 16, Building 5, Sixty Years of October Street. The flat was a secret enclave of western plenty, stocked with enough Bud beer, frozen steaks, broccoli spears and ice-cream sandwiches to last a month. The front door was secured by a welded iron door that clanged open with a six-inch steel key. On a nearby wall was painted a slogan that read, "Selfless work preserves peace and beautifies the earth!" It was here that I waited, and bided my time.

 

One night Igor and a group of us from Sinco went to the Samotlor Club, what passes in Nizhnevartovsk for a restaurant. We ordered caviar, but there wasn't any. We sat in the dark and a rock group played loud, horrible music.

 

"How do you like Nizhnevartovsk, Igor?" I asked him.

"I hate it," he said. "But you see, I hate everywhere. I am pessimist." He said he was fond of Edgar Allan Poe. Then he began to recite some very maudlin verses he had written.

 

"Holes/Holes in the sky/Who knows what hides behind/These dark holes/Holes in my mind..."

 

"Why, that's lovely, Igor," I said.

 

As the conversation proceeded, he felt emboldened to ask me a question. "Please," he said. "Let me ask. Why is there such fascination in the west with the KGB?"

 

The question caught me on the hop. I tried to improvise an answer that was both diplomatic and true.

 

"Fear. Because people were afraid of them," I said.

 

"You see," he said, "I am third lieutenant in KGB."

 

We discussed this organization's sterling qualities: its patriotism and professionalism. When Igor later disappeared into the kitchen to have a word with someone, and the same waitress who had said "nyet" to our request for caviar, reappeared carrying a dish of it spread on halved hard-boiled eggs, I began to think of lgor as rather formidable. Later I found out that a third lieutenant in the KGB was the Russian equivalent of an officer in the Territorial Army.

 

"What does your father do, Igor?" I said.

 

"He is mafia. He controls the electricity supply in Nizhnevartovsk." The term mafia is used to describe any type of individual enterprise which has a component of power attached to it. Igor paid the bill with a thick pile of 5,000 rouble notes. "Mafia" is different from "racketeers", which means criminals, Igor explained. One quarter of the economy ofNizhnevartovsk is mafia, he said.

 

The sinister atmosphere of the new mafia economy only became apparent at night in Nizhnevartovsk, and then it bloomed darkly. One night, for example, after dinner at the Samotlor Oub, Igor and I decided to repair to a casino for a little amusement. Its name, painted in Cyrillic letters on the window, was Byeznyess Klub. Two drunks guarding the door told us the casino was closed. The manager had been shot in a misunderstanding with local racketeers a few weeks earlier. In the street, a police roadblock stopped and searched the boots of cars for weapons. After that we walked to the railway station, the terminus of a spur of the Trans-Siberian Railway, where a train was unloading prisoners.

 

One morning, they took me out by helicopter to look at the Sinco site. In the summer, this can only be reached by air, because once the marshy ground has thawed it is too soft even to walk on. We flew low over the flat, uniform vastness of birch forest that disappeared behind the horizon in every direction. It was a featureless and forbidding landscape. Occasionally it was scarred by a patch of open ground, where the forest had been cut down, or burnt, or poisoned, like the hide of an enormous old war elephant. Our route followed the ditch of mud that served, when frozen, as a road to the site in the winter, and passed over the hulks of two bulldozers, half submerged, that had got stuck in the mud and been abandoned.

 

The Sinco site had the primitive, pioneering appearance of Texas in the nineteenth century. It didn't exactly meet modern safety standards. A motley collection of Russian and western equipment, most of it half buried in dried mud, lay scattered in an improvised fashion around a well-worn drilling rig. Mosquitoes hovered in brown clouds, what Chekhov called "the local version of an Egyptian plague". Sinco's main accomplishment up to now has been to build a 65km pipeline from their operating area to the national pipeline grid in the space of one winter, defying the expectations of the cold-hardened Russian workforce, who thought they would never manage it. By now Sinco is producing lO,OOO barrels a day, though it is not yet making a profit.

 

But I had yet to see the Great Faucet itself, which I expected to find somewhere amid the oil wells of the vast Samotlor field. Igor agreed to drive me in a four-wheel-drive Niva to look for it.

 

Getting there was like a descent into the underworld. The road leading out to it is in perpetual need of resurfacing, because it is always steadily sinking into the soft ground. Yet it encourages the wildest and most careless driving. The photographs of the many who have died on it, and are buried beside it, stare out from their gravestones, their fading monochrome souls warning of the dangers that lie ahead. Blighted trees like bleached bones stand in ponds of oil with black, mirror-like surfaces. The smell of oil in the air is so strong it makes you dizzy.

 

The well-sites of the Samotlor field are joined by a network of what might ironically be called roads: actually they are troughs of mud along which a four-wheel-drive vehicle can pass with difficulty. Alongside this run the branch pipelines that feed into the national pipeline system, and these are the pipelines that leak most of the oil.

 

I suppose I had expected endless ranks of huge, frightening, screaming machines, pummelling the earth, making it shake like an earthquake. Yet although there are 10,000 wells in the Samotlor field, it is impossible to see them together: they are grouped in small numbers on separate patches of ground. We pulled in to one of these. The site had half a dozen black "nodding donkey" pumps and a trailer, and was surfaced with sand to stop things sinking. Two men ran the equipment with the peaceful, unhurried, untroubled demeanour of shepherds minding a flock of sheep.There was even a friendly dog moseying about. They both looked like they had been pickled in petroleum. The older one, with a mouthful of silver teeth, was minding a drilling rig; his younger colleague cheerfully insisted I take his photograph. It was like visiting a small farm, except everything was black with oil. This was it, the industrial heart of darkness. An ecological disaster area, yet everyone was very cordial, and innocent.

 

I pressed Igor on to drive towards a gigantic swelling cloud of smoke which was blackening the sky. It was so big it was hard to tell how far away it was, so eventually we turned back. Igor was anxious to get to the luxury mafia restaurant he had booked for the evening. But on the way back the Niva broke down. The Russian driving test includes questions about how to repair a car, but Igor was unable to revive the dead engine. He borrowed my Swiss army knife and pulled open each blade to see if anyone of them would do the trick. None did, so we had to hitchhike back into town. Igor sat unhappily on his briefcase on the roadside. The mosquitoes swarmed around us. It was getting dark.

 

Finally, a workers' transport stopped and picked us up. It had six double wheels and a separate cab for the driver. Inside, two dozen oil workers were on their way home. Several animated card games were in progress. The players slapped down the cards violently onto boards that were balanced on the knees of facing players. The truck sped back to Nizhnevartovsk, bouncing dangerously over the bad road. Back in Sixty Years of October Street, there was a bottle of iced vodka with my name on it.

 

Edward Fox travelled to Siberia with the help of East/ West Travel Ltd, who specialize in individual travel to Russia and the post-Soviet republics. (I5 KensingtonHigh Street, London W8SNP. Tel: 071-9383211).

Photographs taken by Edward Fox on Kodak Fun Panoramic cameras