* Nenets tribe in Arctic fear livelihood as Gazprom expands
* Experts say compensation insufficient, demands must be met
* Tundra reindeer herders say gas find "catastrophic"
67 N LATITUDE, 71 E LONGITUDE, Russia, Oct 6 (Reuters) - The Nenets tribespeople of Russia's frozen Yamal peninsula have survived the age of the Tsars, the Bolshevik revolution and the chaotic 1990s, but now confront their biggest challenge -- under their fur-bundled feet is enough gas to heat the world for five years.
"For them it is fortune, for us terror," said 20-year-old herder Andrei Yezgini, dressed from head to toe in reindeer skin, referring to ambitious plans by state gas giant Gazprom
to drill the region Prime Minister Vladimir Putin has described as "the world's storehouse" of gas and oil.
Putin jetted into the sparsely populated region within the Arctic circle, 2,000 km (1,250 miles) northeast of Moscow, in late September to woo foreign partners to develop a quarter of the world's known gas reserves [ID:nLO729481].
Experts and the Nenets say industry will damage and pollute the tundra, whose flat marshy terrain switches from marigold russets in summer to thick winter snow and is peppered with disc-like thermokarst lakes and crystal blue waterways.
Nenets migrate north to south over 150 km every year, spending only a few days in one place, living off reindeer and fish and lugging their "chums", or tents, kerosene lamps and wood-fired stoves on reindeer-pulled sleighs.
"The fact they've found deposits here is catastrophic," said Slava Vanuito, 34, his Asiatic eyes narrowing as a gust of Arctic wind sweeps over a tundra bouncy from the thick carpet of springy moss that feeds the reindeer.
Like many young Nenets men, Vanuito served in the Russian army -- he fought against Chechens in the first separatist war -- and decided to return to his nomadic life in Yamal, which means "world's end" in Nenets, a distant relative of Finnish.
Numbering around 42,000, the Nenets are entirely dependent on reindeer, which appear on the Yamal region's crest, and are animists. Their strict code of superstitions and gender divisions has been virtually untouched for at least a millennium.
BROKEN DEER LEGS
From a Soviet-made helicopter, a bright blue train with 20 wagons can be seen snaking through the tundra, part of a newly-opened railway which experts say heralds severe damage.
Opened by Putin last month, it will serve Russia's biggest gas field Bovanenkovo at the top of Yamal, which will feed the Nord Stream pipeline to Germany from 2012, and runs around two-thirds of the 700-km-long peninsula.
Yezgini said it is breaking the legs of the deer. "There's debris and gravel around the tracks, frightening and hurting them." He added pastures around the track have lost shrubbery.
Bruce Forbes, research professor in global change at the University of Lapland in Finland, said the railway is only the beginning: "We are just seeing the tip of the iceberg in terms of destruction," he told Reuters by telephone.
The government is keen to develop the Yamalo-Nenets region as soon as possible. Last month it proposed tax breaks to entice foreign firms to drill the frozen mass of land, which has field reserves of 16 trillion cubic metres.
Already Russia's main gas-producing region, Gazprom said it gives Yamal 20 billion roubles ($665 million) every year, but declined to comment on how the money is distributed.
Yamal accounts for more than 90 percent of Gazprom's gas output, and total revenues last year stood at 3.5 trillion roubles.
Vanuito, sharpening a saw for antler trimming, dismissed such claims by Gazprom as "rubbish". He said they received a "pittance" of a monthly state stipend of 2,000 roubles ($66).
In January, Forbes sent a research report to the firms urging the coexistence of oil and gas activities with the Nenets by asking companies to respect their demands, such as no illegal hunting by gas workers and the burying of pipelines.
Citing herders and administration officials, he said compensations for pasture degradation and land withdrawals tended to be absorbed by local government and did not reach the Nenets.
"The European Union needs to be more responsible ethically and morally when considering where they want to buy their gas from," he said, adding Western firms had responded positively to the report.
It is not the first time Russian indigenous people have come under threat from industry. Rights groups say energy firms do not fully respect the culture of the Khanty in Russia's oil-producing region of Khanty-Mansiysk in west Siberia.
Moscow has offered the Nenets free houses in Yamal's capital Salekhard, but Forbes said that was missing the point: "Their animals and their space in the tundra give them complete freedom".
Some state benefits are welcomed by the Nenets -- helicopters take them to towns of several hundred people an hour's flight away and children from age seven are sent to Russian-language schools in towns where they live with other Nenets families.
"I just pray Gazprom won't change us," said Yezgini's mother Valentina, 52. "I want my grandchildren to see our land as it is: beautiful, fresh, full of berries and deer." (Additional reporting by Vladimir Soldatkin in Moscow; Editing by Janet Lawrence)
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