1) Recent News on the UK ECA ECGD
A. ECGD Funded Suharto Tanks, Belying UK’s Claimed Ethical Foreign Policy
B. Trade Secretary Now Facing Review for Weakening Corruption Controls
C. Legal Challenge Ahead for UK
ECA
2) Recent News on the Baku-Tbilisi-Ceyhan (BTC) Pipeline
A. Pipeline to Exceed Costs
B. BTC Riddled with Corrosion
C. UK Admits Pipeline Failure Due to
Experimental Engineering
D. Exxon Spurns BTC Pipeline
for Trains
E. Italian Bank Pulls $60M
Funding as BTC Nears Completion
3) Recent News on the Russian Oil and Gas Project Sakhalin II
A. Shell’s Sakhalin II Charm Campaign Overstates Benefits to Russia
B. Sakhalin’s Indigenous
People Plan Protests of Oil and Gas Projects
C. Sakhalin II Pipeline
Soils Water in Korsakov,
Russia
4)
Recent News on OPIC
A. OPIC Sues Indian Government Over Dabhol
B. OPIC Promises $250M in Support to Israeli
Gas Pipeline
5)
Recent News on the Japanese ECA JBIC
A. JBIC Pledges $220M to Indonesian Power Plants
B. JBIC Looks Toward Mining
6) Recent News on the Russian ECA and
Foreign Trade Bank
B. Russian and Indian ECAs Enter Into Agreement
7) Qatar LNG Company Receives $930M in Support
from US ExIm Bank
8) French ECA COFACE Uncertified for Three Years
Running
1) Recent News on the UK ECA ECGD
A. ECGD
Funded Suharto Tanks, Belying UK’s Claimed Ethical Foreign Policy
December 7, 2004 (The Guardian, UK) - The UK’s sale of 100 Scorpion
tanks to the brutal and corrupt Suharto regime in Indonesia points
to the ease with which “ethical foreign policy” goals can be abandoned. The tanks, later used against independence
fighters, were covered in part by the UK ECA Export Credits Guarantee
Department (ECGD). A December
10, 2004, Guardian article reported a development in the Scorpion
tank scandal: investigations have begun into an alleged bribe
paid to Suharto’s daughter to secure the tank deal.
B. Trade
Secretary Now Facing Review for Weakening Corruption Controls
December 2, 2004 (The Guardian, UK) - The ECGD weakened its new anti-corruption standard
on the demand of Trade Secretary Patricia Hewitt, and she is now
facing a judicial review for her actions, which followed intense
lobbying by BAE, Airbus, and Rolls-Royce. On November 30, 2004, the BBC ran
an article and a TV news investigative report (read
the show’s transcript (PDF)) on the ECGD corruption scandals,
including the cases of
India’s Dabhol and Nigeria’s
Bonny
Island projects.
C. Legal Challenge Ahead for
UK ECA
November
20, 2004 (Financial Times) – Having backtracked recently on its
new anti-corruption rules following an intense lobbying campaign
by British-based multinationals, the UK ECA Export Credit Guarantee
Department (ECGD) now faces a legal challenge by anti-corruption
campaigners. BAE, one of the companies which lobbied for
relaxing anti-corruption rules, is under investigation for a Saudi
Arabian deal; a UK Halliburton subsidiary is also under investigation
for bribes Halliburton acknowledges it “may have” paid to Nigerian
officials to secure a construction project [on Bonny Island],
a project also backed by the ECGD. Read the ECA Watch “What’s
New” October 2004 update on the Bonny Island scandal.
2) Recent News on the Baku-Tbilisi-Ceyhan
(BTC) Pipeline
A. BTC
Pipeline to Exceed Costs
November
15, 2004 (Trend, Azerbaijan) – The head of SOCAR [the State Oil Company of the Azerbaijani Republic]
Natiq Aliyev announced that the Baku-Tbilisi-Ceyhan
(BTC) Pipeline, now in its final stages, will cost more than previously
thought. Aliyev stated that “the possible "5 to 7 per cent"
appreciation of the project is not the fault of sponsors or contractors,
but because "[t]he BTC pipeline has very strong adversaries
who are using all possible and impossible tricks in an attempt
to hamper its implementation.” The pipeline is backed by private and ECA interests,
primarily the UK’s
BP and ECAs from Europe and the US.
B. BTC
Pipeline Riddled with Corrosion
November
17, 2004 (AFX Europe) – According to a study by the US consulting firm WorleyParsons,
1,260 joints in one section alone of the Baku-Tbilisi-Ceyhan (BTC)
pipeline have been found to be defective due to corrosion. The US firm investigated the BTC link
at the request of lenders after speculation at the beginning of
2004 that BP, the UK ECA ECGD, and other project partners had
run into trouble. Derek
Mortimore, the former consultant to BP, described decisions made
with regard to pipeline coating technology as "appalling."
C. UK Admits
Pipeline Failure Due to Experimental Engineering
November 23, 2004 (Baku Ceyhan Campaign [comprising PLATFORM,
the Corner House,
KHRP & Friends of the Earth]) – Senior UK government officials admitted in a parliamentary
inquiry that the vital anti-corrosion coating system for the Baku-Tbilisi-Ceyhan
pipeline project had no track record, contrary to assurances given
to MPs in June by the UK Energy Minister. The Trade and Industry Select Committee began
its probe after revelations in the press that BP, the operator
of the project, had ignored internal warnings that their coating
would fail to to seal the pipeline’s welds from corrosion.
The weld coating cracked last winter.
BP secured USD $2.6B in loans from international private
and development banks without disclosing this major design flaw.
The UK ECA, the Export Credits Guarantee Department (ECGD)
is backing the pipeline with £60M public money.
Read an explanation of the coatings
on the pipeline by the Baku Ceyhan Campaign.
D. Exxon
Spurns BTC Pipeline for Trains
November
25, 2004 (The Times, UK)
– Just
as BP’s mammoth BTC pipeline is almost complete, ExxonMobil declared
the project to be too expensive: it now plans to export its Caspian
oil via rail tankers to a Black Sea
port.
E. Italian
Bank Pulls $60M Funding from BTC
December
8, 2004 (The Messenger, Georgia) – The Italian bank Banca Intesa
has decided to divest its USD $60M from the BTC pipeline, adding
to the setbacks already plaguing the pipeline.
Read
the investigative report “The Con-tract of the Century” on
the Intesa divestment and BP’s coverup of the design flaws that
caused the bank concern. Also read the December 1, 2004,
press release by the Baku-Ceyhan Campaign on the Intesa divestment.
3)
Recent News on the Russian Oil and Gas Project Sakhalin
II
A. Shell’s
Sakhalin II Charm Campaign Overstates Benefits to Russia
November
30, 2004 (Source: the Sakhalin Campaign of CEE Bankwatch Network,
FOE, Pacific Environment, PLATFORM, SEW & WWF) –
An independent study by a leading energy economist has
documented the Sakhalin II Production Sharing Agreement (PSA)
to be a major departure from standard PSA terms worldwide. The
study reports that “[t]he benefits which flow to the Russian party
fall a long way short of those which would have been received
had a standard type PSA been used [in which] the Russian party
would receive 45% more economic rent.” Shell recently launched
a charm offensive to boost the controversial Sakhalin II project,
extolling the financial benefits to Russia. Sakhalin II is seeking up to USD $5B in public
financing from the Export Credit Agencies of the US, UK,
and Japan,
and the European Bank for Reconstruction and Development. Read
the Profit Sharing Analysis “The Sakhalin II PSA - a Production
'Non-Sharing' Agreement” (PDF).
B. Sakhalin’s
Indigenous People Plan Protests of Oil and Gas Projects
December 8, 2004 (Sakhalin Independent, Russia) – Sakhalin Environmental
Watch has reported that Sakhalin’s indigenous people have threatened
to start ongoing blockades of roads, bridges and pipeline routes
constructed by Sakhalin Energy, Exxon Neftegas Limited, British
Petroleum and Rosneft-Sakhalinmorneftegas. The resolution to start
protesting was passed at the Congress of Sakhalin’s Indigenous
People, which was held on October 29th.
C. Sakhalin II Pipeline
Soils Water in Korsakov, Russia
November
12, 2004 (Vladivostok News, Russia) - Construction of a pipeline
for the Sakhalin II project near the town of Korsakov threatens
to disrupt water and heat supply to the city, since water reservoirs
located near the pipeline route have been contaminated with construction
site runoff.
4) Recent News on OPIC
A. OPIC
Sues Indian Government Over Dabhol
November
19, 2004 (Financial Express, India) – The US government’s Overseas
Private Investment Corporation (OPIC) has initiated arbitration
against the government of India for breach of investment incentive
agreement and the recovery of its claims of USD $110M on the Dabhol
Power Company over a stalled hydopower plant project. OPIC has
paid over USD $110 million on political risk insurance policies
covering the investors (GE and Bechtel) and Bank of America against
the risk expropriation of their investment in the project. Read OPIC’s Request for Arbitration (PDF).
B. OPIC
Promises $250M in Support to Israeli Gas Pipeline
November 22, 2004 (GLOBES, Israel)
- OPIC has announced approval of USD $250M in political risk insurance
for the construction of a 65-mile pipeline that will serve as
the centerpiece of Israel’s
natural gas system. OPIC’s
insurance will cover a proposed loan arranged by Citigroup for
the construction of a pipeline that will be used to transport
natural gas produced offshore, from Ashdod in southern Israel
to Dor in the north, for downstream power projects in the country.
5) Recent
News on the Japanese ECA JBIC
A. JBIC
Pledges $220M to Indonesian Power Plants
November 26, 2004 (VNA, Vietnam) - The Japanese government, through
the Japan Bank for International Cooperation (JBIC), plans to
extend an export credit worth 2.75B yen (USD $220M) to help Indonesia
improve the capability of its power plants.
B. JBIC
Looks Toward Mining
November
13, 2004 (Daily Times, Pakistan) – The Japanese ECA JBIC notes
a rising demand for funding for now-affordable international metal
mining projects by Japanese metal refiners.
“The need for funds in development projects is increasing
... and I expect bigger growth in the future,” said Katsuhiko
Okazaki, Director of Natural Resources Finance at JBIC. “In order to meet changes in the environment
with demand led by China
and India,
some smelters are increasingly seeking opportunities to take stakes
in mining projects.”
6)
Recent News on the Russian ECA and Foreign Trade Bank
A. Russian Vneshtorgbank
Makes Agreement with Korean ECA and with
Canadian ECA
November
28, 2004 (Pravda) Russia's
foreign trade bank Vneshtorgbank (VTB) has entered into an agreement
with the Export-Import Bank of Korea. In an earlier, November
10, 2004, article on the deal, Pravda added that it was possible
that the Russian gas giant Gazprom was interested in purchasing
Korean equipment, and would be among VTB's customers to use the
proposed USD $30M line of Korean credit.
In a
related December 2, 2004, RIA Novosti article, VTB has entered
into an agreement with Canada’s
ECA Export Decelopment Canada (EDC) and will open a USD $50M credit
to Vneshtorgbank to finance contracts on exports of Canadian goods
and services to Russia.
B. Russian and Indian ECAs Enter
Into Agreement
November
18, 2004 (Economic Times, India) – India’s ECA Export Credit Guarantee
Corporation (ECGC), Russia’s ECA ExIm (ExIm Bank of Russia), and
the Russian bank Vnesheconombank (VEB) have signed a Memorandum
of Understanding to promote trade between the two countries as
part of a project in a third country. Another article on the subject
on December 3, 2004, (The Hindu) added that in this new economic
partnership there has been a substantial and new emphasis on the
fields of information technology, banking, and energy. In the energy sector, the Gas Authority of India
Ltd (GAIL) will collaborate in Russia,
India
and third countries on underground storage projects (with STROITANSGAZ)
and exploration and delivery of natural gas (with GAZPROM).
GAIL and Russian company Skonchinsky Mining Institute have
also decided to develop a pilot project on lignite (brown coal)
gasification in Tamil Nadu and Rajasthan.
7)
Qatar
LNG Company Receives $930M in Support from US ExIm Bank
November
18, 2004 (Source: US ExIm Bank via PR Newswire) – The ECA US Export-Import
Bank has approved a loan guarantee of up to USD $930M to support
US exports to supply Qatar Liquefied Gas Co. Ltd. II (Qatargas
II) in its development of a liquefied natural gas (LNG) project
in Qatar.
8) French ECA COFACE
Uncertified for Three Years Running
December 9, 2004 (Source: Friends of the Earth- France [press release
in French]) - The highest-ranking financial public institution in France (Cour des Comptes
or Court of Accounts), which has jurisdiction over the financial
affairs of the French public sector and is charged with auditing
government spending, has now refused to certify the public bank
account for the French ECA COFACE for three years.
View
Back Issues of What's New:
