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bp should not get "free public money" to build controversial pipeline, say international ngos

Sixty-four non-governmental organisations from over 37 countries have written to the World Bank and major national export credit agencies strongly opposing plans by BP, the world's third largest oil company, to use "free public money" to build a controversial oil pipeline from the Caspian to the Mediterranean.

The proposed Baku-T'bilisi-Ceyhan oil pipeline will run through Azerbaijan, Georgia and Turkey. 70 per cent of the required $3.3 billion is being sought from taxpayers primarily in Europe, Japan and the US through public lending institutions, such as the World Bank and export credit agencies.

None of the most important project agreements have been released. Nonetheless, an application for financial support has already been made to the US ExIm Bank, even though most of the environmental and social studies have yet to be finalised.

NGOs are concerned that the pipeline will bring few benefits to poorer people and could exacerbate tensions in the region which is only just recovering from a number of major conflicts. The project is also criticised for its potential to fuel damaging climate change.

"The long-term developmental benefits of current oil and gas development in the Caspian region are questionable", said Manana Kochladze from Green Alternatives in Georgia. "The use of 'free public money' cannot be justifiable unless the project is able to clearly demonstrate positive local and regional development impacts associated with the project over the next 30 years - which is the planned lifetime of the pipeline according to oil companies".

"Some people will lose their entire livelihood because of the project and it is likely that companies' promises to bring jobs and local development will not be met", said Petr Hlobil of CEE Bankwatch. "Local people lack basic energy supplies. But the oil and gas from the Caspian will be piped straight to western markets. Local communities will be bypassed completely."

"This pipeline would militarise a corridor running from the Caspian to the Mediterranean", says Kerim Yildiz of the Kurdish Human Rights Project. "This could threaten the fragile cease fire in the Kurdish region through which the pipeline will pass."

"The pipeline would have a major effect on climate change ", says Kate Hampton of Friends of the Earth International. "The oil transported along the pipeline, once burned, will contribute 185 million tonnes of carbon dioxide to the atmosphere every year. This is equivalent to nearly one-third of the UK’s total CO2 emissions for 2000. If public money is used for this pipeline, we will all be subsiding dirty energy, both here and, worse, in the US, where emissions are still growing and where the Bush Administration has reneged on the Kyoto climate treaty."

The NGOs are demanding that no public money be made available to the consortium seeking to build the pipeline unless stringent human rights, development and environment conditions are met.

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notes

1 John Browne, chief executive of BP, which is leading the BTC Sponsor Group, told the Financial Times in November 1998 that the BTC project would not be possible unless " 'free public money' was offered by government to build the line."

2 The Baku-T'bilisi-Ceyhan (BTC) Main Export Oil Pipeline Project is only a part of a much wider oil and gas development programme in the region, which includes the parallel Baku-Tbilisi-Erzerum gas
pipeline to be laid in the same energy corridor; the off-shore oil and gas fields being developed in the Caspian Sea; and associated
upstream and downstream terminals. The oil and gas pipelines are together referred to as the Azerbaijan-Georgia-Turkey (AGT) project.

3 Such institutions, all of which rely on public money, include: the World's Bank's private sector arms (IFC and MIGA), the European Bank for Reconstruction and Development (EBRD), the European Investment
Bank (EIB) and the US Overseas Private Investment Corporation and the Japan Bank for International Cooperation.

4 For example, the pipeline passes through several Kurdish areas in Turkey and threatens to destabilise the fragile three-year guerrilla ceasefire which recently brought an end to the 15-year armed conflict between the Kurdistan Workers' Party (PKK) and the Turkish security forces which took a devastating toll on the civilian population. The pipeline also passes close to Nagorno-Karabakh, an area fought over in the early 1990s by Azerbaijan and Armenia