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Current Highlight: The BTC Pipeline

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The Baku-T’bilisi-Ceyhan pipeline is intended to carry oil from the Caspian to the Mediterranean Sea for shipment to the West. The pipeline does not adhere to any formal environmental standards and has been a source of social and political conflicts across Azerbaijan, Georgia, and Turkey. Financiers are criticized for their lack of dependability in monitoring the construction of the project, headed mainly by BP. These financiers include the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), and several ECAs, including the ECGD (UK), Hermes ( Germany), Coface ( France), SACE ( Italy), US Ex-Im (USA) and JBIC ( Japan).

Onshore oilfields from the Soviet era, south of Baku. The coastline here is littered with rusting derricks and pools of oil. The growth area, that will feed the Baku-Tbilisi-Ceyhan pipeline, is offshore.

-Baku-Ceyhan Campaign

Photo Credit:Yury Urbansky/ CEE Bankwatch Network

* Background on the BTC Pipeline
* News Items

Background on the BTC Pipeline:

The Baku-T’bilisi-Ceyhan oil pipeline is part of a network of pipelines to be built by BP from the Caspian Sea. The total cost of the BTC leg is around $3.6 billion. It is expected to carry 1 million barrels of oil a day to the Mediterranean when it is complete in late 2005. This oil will be shipped west, not to be used in the Middle East even though many of the territories through which it passes are energy-poor. The pipeline is under fire from local people as well as international NGOs because of its range of environmental and human rights risks.

Photo Credit:Baku-Ceyhan Campaign

The pipeline will effect the lives of people living along the 1,750 kilometer (1,087 mile) stretch of land through which the pipeline winds. The people most affected will be those who owned the land in the path of the pipeline. In acquisition of this land, BP went against World Bank policies and used emergency powers to speed up the process. The Environmental and Social Impact Assessment did not contain a clear outline of resettlement and compensation measures, which is disturbing because in the similar situation of the OCENSA pipeline in Colombia, BP never adequately compensated farmers whose land was disturbed by the pipeline. The benefit to the peoples whose land is in the path of the pipeline is supposed to lie in the revenue from taxes on BP’s profit, since none of the oil is to remain in the area. But as seen from BP’s Trans-Alaska pipeline, BP is likely to do all it can to get around paying these taxes.

The activities of the consortium of oil companies building the pipeline are regulated by the Host Contract Agreements (HGAs) formed with the host countries, which are written very favorably toward BP and the other involved corporations. BP is exempt from any laws which would interfere with the profitability of the pipeline. However, these agreements necessitate that BP follow the environmental guidelines put forth by the World Bank, which BP have not strictly adhered to. The pipeline is under the protection of the local militaries, creating a militarized corridor through these already war-torn countries. The pipeline becomes a potential target for terrorist actions. The governmental protection of the pipelines means that any protest by local people is handled by their own government, increasing the already present political tensions. In Turkey, Ferhat Kaya, a local protest organizer, was arrested and allegedly beaten by the police in May 2004, and detained again in September 2004.

Many of the political tensions arising from the pipeline are a direct result of the active opposition to the pipeline’s impact on the environment. Many objections to the pipeline come from its lack of environmental accountability. The project violates World Bank and EBRD regulations as well as Turkish laws and EIA objectives on a total of 173 counts. There was no adequate analysis of the effect the pipeline would have on the flora and fauna of the region or its impact on climate change. At one million barrels a day, the amount of carbon dioxide (a major greenhouse gas) produced in a year is equal to that produced by the entire power industry in the UK, making a significant contribution to global warming. The pipeline runs through a part of Turkey with a history of several major earthquakes, putting the pipeline at serious risk from earthquake damage. Damage to the pipeline has already occurred however, due to a joint sealant failure. A contract was awarded to the Canadian firm Speciality Polymer Coatings to provide the pipeline with their sealant SPC 2888 which had never before been used on such a project. Soon after the coat was applied, cracks began to appear and a quarter of the joints in the Turkish segment had to be repaired. Derek Mortimore, a BP employee, was fired soon after he alerted everyone to the risk caused by the sealant. The controversy over the experimental engineering on the pipeline prompted Banca Intessa, Italy’s largest bank, to begin withdrawal of its financing from the project.

The BTC pipeline was inaugurated on May 25, 2005, by the presidents of Azerbaijan, Georgia, and Turkey at its start terminal near Baku. It is expected to take about six months for the oil to completely fill the pipeline.

More Useful Links on the BTC Pipeline:

The Baku-Ceyhan Campaign

Now That Oil Flow Has Begun: the BTC Explained May 26, 2005

One Year On: Memorandum on the State of the Baku-Tbilisi-Ceyhan Oil Pipeline Since Public Funding Approved [Word Doc] April 28,2005

News on the BTC Pipeline:

Newsfeed from the Baku-Ceyhan Campaign Site

For more information, contact the ECA Watch Facilitator.

ECA Watch Campaign Member Links:

CEE Bankwatch - BTC Page

PLATFORM (a UK "meeting place" for artists and activists) - BTC Page

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