Dow Jones Business News

Thursday March 27, 6:20 pm ET
By Stephan Kueffner, Of DOW JONES NEWSWIRES

SANTIAGO (Dow Jones)--The debate over a controversial crude oil
pipeline nearing completion in Ecuador has taken a new turn following
a parliamentary hearing in Germany.

While earlier criticism there focused on whether Westdeutsche
Landesbank Girozentrale AG (G.WLG) as financial consortium leader
should pull the plug on the $1.12 billion deal, the issue now focuses
on potential modifications of the OCP project, which cuts across the
Andes through sensitive rain forests near active volcanoes.

WestLB will "look into it and answer at the appropriate time," a
spokesman said Thursday.

He reiterated that the project meets tough environmental standards,
including criteria set by the World Bank (News - Websites), citing a
study by engineering company Stone & Webster financed by the
German institution.

"The vegetation is clearly reclaiming ground swiftly. In some parts,
photographs show it's hard to distinguish between the before and
after," he added.

But environmental groups in Germany and Ecuador haven't been the
only ones to protest against OCP, a consortium of oil companies
Alberta Energy Co. Ltd. (AOG) , Agip Petroleum , Perenco, Occidental
Petroleum Corp. (NYSE:OXY - News) , Repsol-YPF S.A. , and Perez
Companc S.A. , and construction firm Techint (I.TCH).

The World Bank also doesn't share the study's conclusion that the OCP
pipeline is safe.

According to World Bank officials, the multilateral lender remains
concerned by OCP's potential harm. It is neither supporting nor funding
the project, and due to its separation from the project, it's unable to
certify that the pipeline meets its environmental standards, it says.

In his own testimony, former World Bank environmental specialist
Robert Goodland presented an eight-point action plan on "West LB's
immediate responsibilities to reduce the major risks."

The plan includes measures to estimate environmental risks and
eliminate human rights violations in the Amazon oil extraction areas,
alternative routes in particularly critical areas and sufficient social and
ecological compensation, to be accompanied by independent experts.

"Oil spills have already begun, poisoning village drinking water" March
3, Goodland said, adding OCP needed to be prepared to "deal with
operational impacts prudently and efficiently."

However, "our possibilities for influence are limited," the spokesman
said. " Seeking to transport the oil from port in double-wall oil tankers
is important, but we can't force ship owners to do so," he added,
mentioning a detail from the action plan.

For the state government composed of Social Democrats and
environmentalist Greens, the project has been an embarrassment.

North Rhine-Westphalia owns 43% of WestLB, with the remainder held
by municipally owned banks.

Wednesday's hearing was held after Green legislators found WestLB's
earlier testimony unsatisfactory and following government fact-finding
missions to Ecuador.

Goodland's plan "opened perspectives that WestLB should urgently
carry out," said Green legislator Ute Koczy, who chaired the hearing.
"We don't need backward-looking discussions, we need constructive
solutions in a dialogue with the affected. The risk of the pipeline lies
not just in its construction, but also in its operations."

According to WestLB Wednesday, the project is nearing completion
and the first oil could be pumped through the pipeline in June, with full
operations beginning in September.

OCP has also met stiff local opposition in Ecuador, including
sometimes violent protests by indigenous groups in the affected rain
forest areas, countered with police and military force.

The protests in Ecuador earlier led to some modifications to the
project. The 503-kilometer pipeline will now largely be placed

However, critics say that this could lead to underground oil leakage and
contamination of ground water.

Company Web site:

Web site with Goodland's earlier report: assess.pdf

-By Stephan Kueffner, Dow Jones Newswires; +56 2 460 8546;