risky oil for the rich
baku-ceyhan oil pipeline in the
caspian region
corporates: bp [united kingdom],
socar [azerbaijan],
tpao [turkey], itochu [japan], amerada
hess [saudi arabia], eni [italy], statoil
[norway], unocal [usa], totalfinaelf
[france], inpex [japan], conocophillips
[usa]
Donkey cart near Qarabork,
Azerbaijan.,
©
willemijn nagel |
“Although there is a permanent
energy crisis in Azerbaijan, the
development banks support the energy
needs of US citizens before considering
Azerbaijanians who have limited access
to gas and electricity. The oil and gas
from the Caspian will be piped straight
to western markets, completely
bypassing local communities.”
Samir Isaev, local campaigner in
Azerbaijan
|
In late 2003, shortly after the national
elections in Georgia and Azerbaijan
resulted in massive uprisings, the World
Bank IFC decided to finance the
Baku-Tbilisi-Ceyhan (BTC) oil pipeline. One
week later, the European Bank for
Reconstruction and Development approved
funding for this project, one of the most
controversial oil pipelines in the world.
Despite protests from human rights and
environmental campaigners, the European
Investment Bank and export credit agencies
are likely to follow suit.
When constructed, this US$3.5 billion
pipeline will carry oil from the Caspian
Sea through Azerbaijan, Georgia and Turkey
to the Mediterranean. In 2005, the 1,770-km
long pipeline is due to transport up to 50
million tonnes of crude oil per year. The
BTC pipeline consortium is led by oil giant
BP, and includes Eni (Italy), Statoil
(Norway), Unocal (US) and TotalFinaElf
(France).
The project is billed by oil industry
operatives as the “project of the century”.
Proponents argue that the pipeline will
provide significant profits to the
countries involved, transform the business
environment, and deliver jobs and
investment programmes to local communities
– all while protecting the environment.
Detractors, however, feel that the IFIs are
supporting the power of corrupt and
authoritarian leaders and profitable
corporations at the expense of people and
the environment by financing the
project.
creepy contracts
This project is very likely to lead to big
corruption problems. Azerbaijan and Georgia
fall 125th and 127th, respectively, out of
the 133 countries ranked in the
Transparency International Corruption
Perceptions Index 2003. Their sectoral
capacity is weak. Azerbaijan, for example,
is the only Caspian state that does not
have an oil spill response plan. In
promoting increased extractive industry
investment in the region, the World Bank is
ignoring the advice of its own evaluation
unit, which recommended against increased
investment of this type in poor governance
situations.
Local and international environmental
organizations including Friends of the
Earth International, Platform, Cornerhouse,
World Wildlife Fund, CEE Bankwatch, and
Amnesty International have urged the World
Bank to stop financing the pipeline.
Considerable negative impacts are inherent
to the project, and IFIs will be forced to
ignore their own social and environmental
policies. All three countries involved have
signed “Host Government Agreements” which
prohibit them from establishing any new
environmental or public health laws that
might affect the financial return of the
pipeline for the next 40-60 years – unless
they compensate the project consortium. In
essence, the project sponsors have
transferred the tremendous risks of the
project to local people through these legal
arrangements. And through their expected
loans and insurance, IFIs will seal the
deal and protect the project
consortium.
environmental risks
In Georgia, the pipeline threatens an
important wildlife protection region, as
well as a catchment area for Georgia’s
mineral water industry. The water industry
comprises 10% of the country’s exports, and
employs more people than the pipeline will
in the future. The chairman of the Dutch
Environmental Impact Assessment Commission
stated that crossing a waterproducing
region “would not be acceptable for Western
Europe. We were astonished.” Also
surprising is that the World Bank’s own
International Finance Corporation (IFC) has
invested in the largest of the water
companies, as well as in a glass bottle
factory that supplies the industry. As
such, the IFC sabotages its own investment
portfolio by supporting the BTC
pipeline.
The danger of oil leakage from the
pipeline is significant, through earthquake
as well as possible sabotage actions. In
Turkey, the pipeline would traverse major
fault lines, six watersheds, and two sites
protected under national legislation. In
Azerbaijan, the pipeline would cross 21
major rivers, impact a sensitive desert
ecosystem and traverse unstable land with
high seismic activity. In Georgia, there
are six major river crossings in areas with
unstable land prone to landslides.
Campaigners are also concerned about the
pipeline’s contribution to global climate
change. The oil transported along the
pipeline, once burned, will contribute 185
million tons of carbon dioxide to the
atmosphere every year.
social problems
The pipeline will pass through politically
unstable regions, including the Armenian
enclave in Azerbaijan and Kurdish areas in
Turkey. The presence of oil and money is
very likely to increase conflict and human
rights violations in these areas.
It is already clear that local people’s
opinions are hardly being considered. In
Turkey 30,000 people live along the route
of the pipeline. These people have not been
properly consulted, despite the World
Bank’s special guidelines for this purpose.
Many of these inhabitants are economically
dependent on their land, and compensation
for its use by the consortium has been
non-existent or too low. In some cases,
construction started before the
compensation was granted.
Clearly, spending public and private
money on projects like the
Baku-Tblisi-Ceyhan oil pipeline will hardly
benefit local people, and will only
increase ‘the paradox of plenty’.
civil society threatens lawsuit
if btc pipeline leaks
Groups opposed to the Baku-Tbilisi-Ceyhan
pipeline have threatened to sue 15 banks
that have financed the project if the
pipeline leaks. The banks, which include
the Royal Bank of Scotland and ABN-AMRO,
will be held liable if they had knowledge
of a potential cause of failure, but failed
to act to remove the risk of pollution, the
groups said in a statement. "The directors
of these private banks may not be aware of
their liabilities in this project," said
Nicholas Hildyard of The Corner House in a
statement. "Now they have been informed, we
hope that they will exercise their duty to
take appropriate action." The other groups
involved in the project are PLATFORM, Green
Alternative, Georgia; the Center for Civic
Initiatives, Azerbaijan; and CEE Bankwatch,
Georgia.
