Summary of contract

• Negotiation, representation, and other relevant context

  In December 2010 the Regional Council of Representatives of Sakhalin Indigenous Minorities (the official body representing the Indigenous Minorities of the Sakhalin Oblast, whose members are elected by a congress every four years), the Government of the Sakhalin Province (in the Russian Far East), and Sakhalin Energy Investment signed a tripartite agreement to authorize the implementation of the second Sakhalin indigenous minorities development plan. This summary covers both the tripartite agreement and the second development plan that the agreement authorizes. The Regional Council, the government, and Sakhalin Energy Investment established a working group to prepare the second development plan, and over the course of 2010, carried out consultations with local Indigenous community members to construct such plan. At a conference in November 2010, the Indigenous delegates declared that they consent to the second development plan and acknowledge the broad community support to the plan (Annex 1). The beneficiaries of the plan are the nearly 4,000 members of the 4 main Indigenous communities and other minorities resident on Sakhalin. The objectives of the plan are to improve the lives of the communities through the delivery of benefits, enhance the capacity of the communities to participate in the management of the plan, assist the communities for the eventual establishment of a development fund, and avoid negative effects caused by the oil and gas project (Art. 1). All compensation for land use was already paid while constructing and operating the project (Art. 2.1.4). The plan contains a detailed baseline of the communities (Art. 2). An evaluation of the first development plan is available in number 3.1. of the second development plan (Art. 3.1). Annex 3 lists the projects benefiting the Indigenous minorities of Sakhalin that have been already supported by Sakhalin Energy Investment. Indigenous community members were “polled” as to preferences for development measures and programmes (Art. 4.1). The proposals received during the consultations for the design of the second development plan are listed in Annex 6, and more information about the consultation and participatory processes are located at Arts. 1.3, 1.4, 3.2, 4.1, 4.4.1.

• Governance, implementation, dispute resolution

  Open consultations were held in 10 communities with more than 500 representatives for the design of the second development plan. The Sakhalin Indigenous Minority communities wanted the second development plan to support education, culture, healthcare, traditional occupations and develop a robust monitoring process, as well as pay more attention to keeping the local population informed of the plan’s progress (Art. 3.2.2). The major concerns expressed by the communities regarding the project are the effects of oil spills, the protection of biodiversity, the method for distributing funds and the grievances procedure for both the oil and gas project and the second development plan (Art. 3.3.2). The second development plan will have a coordinator appointed by the parties and the following governance bodies: a multistakeholder governing board (including representatives from the government, Sakhalin Energy Investment, and various Indigenous representatives), a governing board executive committee, a traditional economic activities support programme committee and a social development fund council (Arts. 4.4, 4.2). Timely review and adjustment of the second development plan will be conducted in order to meet the needs of the communities (Art. 4.4.3). Grievances regarding the second development plan shall be received in writing or oral form, Appendix 6 includes a grievance form. The procedure for grievances includes the following steps described in the second development plan: receipt of grievance, assessment, registration and assignment of the responsible person, acknowledgment of receipt, investigation, and settlement, close-out, reporting and monitoring. If the grievance is unsettled and the governing board considers that all possible actions were taken, the case will inform Sakhalin Energy Investment, and the executive committee will receive the complaint for “further work” (Art. 4.4.4). The parties will monitor the progress, outcomes, and effects of the second development plan and produce a series of reports and evaluations. There will be an internal monitoring team and a third party external monitor, who will be a social science professional with extensive international experience in Indigenous peoples’ project development. There will be an evaluation team that will conduct formal evaluations (Art. 4.5).

• Fiscal obligations: content

  Sakhalin Energy Investment will contribute on average US$ 312,000 for 5 years to support the second development plan. Sakhalin Energy Investment will pay the salary of the coordinator of the second development plan, which is a full-time position. Sakhalin Energy Investment will provide financial support for the meetings and tasks of the governing bodies of the second development plan as well as the parties meetings. The budget of the second development plan will be allocated equally between the social development fund and the traditional economic activities support programme during the first year, and the governing board will annually approve the budget allocation for the coming years (Art. 4.6). Close to half of the total development plan budget is expected to be allocated for the programs of the support development fund (Art. 4.2.1) Half of the total development plan budget is expected to be allocated to traditional economic activities for the first year and this will be adjusted annually by the governing board (Art. 4.2.2).

• Community development obligations: Local content

  The traditional economic activities support programme will address issues of Indigenous employment and business development emphasizing traditional activities such as reindeer herding, fishing, gathering, crafts as well as building capacity of Indigenous entrepreneurs to function competitively in the larger market economy. The main components of the traditional economic activities support program are business plans, self-sufficiency grants, and a micro-credit fund. The distribution of funds among these components will be decided by the governing board and the traditional economic activities program committee with advice from the experts group (Art. 4.2.2).

• Community development obligations: Infrastructure and social services

  The second development plan recommends allocating part of the budget under the social development fund to provide financial assistance for: surgical treatment of eye diseases, prosthodontic dentistry,students who are studying healthcare related careers, and students of higher education, vocational secondary or beginning professional education (Art. 4.2.1).

• Community development obligations: Other

  The second development plan will support two programs, the first is the social development fund that will cover all non-economic development initiatives, and the second, the traditional economic activities support program will emphasize economic development. The social development fund council will decide how to allocate funds and the council will receive advice from an expert group with representatives from all parties to this agreement. The social development fund will care for education, healthcare, culture, training and capacity-building (Art. 4.2).

• Environmental and social protection

  Sakhalin Energy Investment has specific commitments regarding Indigenous peoples and the environment that are listed in a Health, Safety, Environmental and Social Action Plan (HSESAP) that is publicly available (Art. 2.1.3). The Council of Representatives of Sakhalin Indigenous Minorities, the government, and Sakhalin Energy Investment have as an objective of the tripartite agreement to prevent or mitigate, in accordance with environmental requirements, of any potential adverse impacts produced by the oil and gas project on the native habitat, traditional ways of life and economic activities of the indigenous communities (Annex 1, Art. 4.1). Concerns raised by Sakhalin Indigenous Minority community members are addressed in a mitigation matrix (Art. 3.3.2).

• Transparency or confidentiality

  In the process of grievances settlement, the complainant can decide if she wants to disclose grievance related information to third parties or if it should remain confidential (Art. 4.4.4). The following documents will be disclosed to the public through the Sakhalin Energy Investment’s website: the progress and implementation reports, the external monitor reports, the annual financial reports of the social development fund and traditional economic activities support programme, the grant application forms and procedures, and the grievance procedure (Art. 4.5.6).

• Reference to investor-state contract

  Yes. The Sakhalin-2 Project is also being implemented under the first production sharing agreement (PSA) in the Russian Federation (Art. 1.2).

• Other noteworthy clauses

  The government’s primary role under the tripartite agreement is to provide staff to the governing board and other relevant bodies, and to coordinate the work of local authorities for the implementation of the second development plan (Annex 1, Art. 3.2.) Any party can withdraw from the agreement by giving two months’ notice (Annex 1, Art. 6.4). The second development plan seeks to track its compliance with international standards such as policies of the World Bank and International Finance Corporation (Art. 2.1.2 and Annex 5).