ENVIRONMENT-ECUADOR: Oil Pipeline Project Assailed

By Jim Lobe Reprint | | Print |

Jim Lobe

WASHINGTON, Nov 29 2001 (IPS) - A prominent German bank is coming under renewed pressure to withdraw financing for an oil pipeline project that critics say threatens unique ecosystems in the Ecuadorean highlands.

In a new report, the U.S.-based group Amazon Watch says the Oleoducto de Crudo Pesado (OCP, or Crude Oil Pipeline) project fails to meet minimal environmental standards used by the World Bank.

In a letter to Westdeutsche Landesbank (WestLB), which leads a consortium of banks providing 900 million dollars to the project, Amazon Watch and more than 30 other Ecuadorean and international non-governmental oganisations have called for the immediate suspension of loan disbursements.

“Pipeline construction has reached a critical juncture,” the letter says, “one that if not halted immediately, will result in permanent and irreversible damage to rare ecosystems and critically endangered species.”

The letter recalls that WestLB – 42 percent of which is owned by the government of North Rhein Westphalia (NRW) – has itself said it would not support the OCP if the project were found to violate World Bank environmental policies and guidelines, a position most recently stated in a Nov. 20 press release.

“An indispensable requirement for any financial involvement of WestLB is full compliance with the strict and globally recognised environmental standards of the World Bank by the project sponsors,” the bank said in the statement, adding that it was putting together an independent environmental team to ensure the project’s implementation complies with World Bank policies.

“Given the findings of this report and WestLB’s stated environmental policy, we are urging the bank and the Parliament of NRW to conduct more thorough due diligence and to suspend the OCP loan at once,” said Atossa Soltani, of Amazon Watch.

Officials at WestLB’s Duesseldorf headquarters told IPS Wednesday, however, that they had not yet received the new report. “We are not aware of the study and must check it first,” said spokesman Michael Wilde. “We are looking closely at the project.”

The proposed pipeline has provoked controversy virtually from its conception. When completed, it will stretch 500 kilometres from the Ecuadorean Amazon to the Pacific Ocean, passing through several indigenous territories and ecologically fragile protected areas. These include Mindo Namibillo Cloudforest Reserve, one of the world’s premier and most pristine bird sanctuaries.

The government of President Gustavo Noboa has defended the 1.1- billion-dollar project as essential to jump-start Ecuador’s troubled economy. Oil production, which has lagged in recent years, is supposed to double once the crude begins flowing through the OCP to ports on the Pacific coast.

Critics, however, argue that the costs to Ecuador’s indigenous cultures and unique ecologies will be too great. Pipeline spills would risk despoiling potential eco-tourism spots and construction of the pipeline itself – clearing of land has already begun in some sensitive areas – will likely draw settlers who may clash with the indigenous groups and exert unsustainable pressure on the fragile rainforest ecologies, they say.

Indigenous groups, major players in Ecuadorean politics, have carried out demonstrations, including road blockades, against the project and have gone to court to try to stop it from proceeding.

But Noboa and the chief investors in the project – Canada’s Alberta Energy, Spain’s Repsol-YPF, and U.S. companies Occidental Petroleum and Kerr-McGee – all have vowed to go forward.

“The pipeline will be built, and that is final,” Noboa said last May after his own environment minister criticised it publicly. “I am not going to let them mess things up for the country (just because of) a handful of idiots.”

The controversy is roiling politics in NRW, too. Green Party members in the state parliament and even the state’s environment minister, Baerbel Hoehn, have spoken out against WestLB’s participation in the project. Earlier this week, the parliamentary committee responsible for foreign development issues set a hearing to review the status of the project and the Amazon Watch report Jan 14.

The 11-page study, written by Patricia B. Caffrey who recent completed a three-year stint as the World Wildlife Fund’s representative and director in Bolivia, found seven major violations of World Bank environmental policies.

It said the project’s initial environmental impact assessment (EIA) misjudged the conservation value of the natural areas affected by the project and also gave insufficient consideration to the OCP’s upstream and downstream impacts.

In addition, the EIA failed to include analyses of project alternatives or offer economic comparisons for alternatives it did consider, according to Caffrey.

The study assailed the EIA for failing to offer measures that could offset potential environmental damage to biodiversity and the construction consortium itself for failing to set aside funds for promoting local conservation activities – a violation of the World Bank’s natural habitat policy.

It also found that consultation with local groups had been “deficient” and far below minimal standards set out by the World Bank.