Amazon Pipeline Downgraded by Moody's: Criticized Again by the World Bank
Sassenberg, Germany --- Representatives from more than forty
non-governmental organizations from eight countries, along with German
parliamentarians and political party activists, concluded a 3-day summit
today in Sassenberg on the growing environmental and social problems caused
by the new oil pipeline in Ecuador--one of the World's most controversial
projects. The participants vowed to intensify the international campaign
against the Ecuador Heavy Crude Oil Pipeline (Oleoducto Crudos Pesados,
The OCP pipeline has been embroiled in protests since it broke ground more
than 15 months ago. In October 2002, one of the two financial rating
agencies for the project, Moody's, downgraded the OCP's investment rating to
borderline junk status (Baa3) citing, inter alia, growing environmental,
political and economic risks.
The participants of the Summit made plans for stepping up the campaign in
the home countries of the OCP consortium members, which include: EnCana
(Canada, 31.4% share), Repsol-YPF (Spain, 25.6%), Pecom Energia (Argentina,
15%), Occidental Petroleum (U.S., 12.2%), ENI-AGIP (Italy, 7.5%), Techint
(Argentina, 4.1%), Perenco (UK, 4.0%). The international campaign will also
step up efforts to urge withdrawal of financial support for OCP by an
international consortium of banks, insurance companies and pension funds
from Germany, Italy, Spain, the United Kingdom, Portugal and the United
States. Any further deterioration in the financial rating of OCP could lead
to withdrawal of US insurance companies and pension fund investors, which
legally cannot maintain large holdings in debt securities rated below
OCP would transport heavy crude from Ecuador's biodiversity rich Amazon
rainforest region to the Pacific Coast. The pipeline route cuts through
seven legally protected national parks and reserves, including a World Bank
financed biodiversity project. In order to fill OCP, oil production is
expected to double in Ecuador, with tremendous impacts on indigenous peoples
and intact forests in the Amazon rainforest as well as along the 300-mile
pipeline corridor to the sea.
The International NGO meeting took place in the province of North Rhine
Westphalia in Germany because of growing public outrage over the
environmental and social negligence of the lead syndicator of the OCP loans,
the West Deutsche Landesbank (West LB). West LB is 43% owned by the
provincial government of North Rhine Westphalia.
Groups taking part in the meeting reviewed evidence of continuing
environmental, social, and human rights abuses associated with the pipeline.
Despite a growing public protest over the past year, OCP and West LB as well
as major financial partners such as the Italian Banca Nazionale del Lavoro
have continued to ignore basic good international practice concerning the
environment and social impacts.
West LB has publicly stated several times that compliance by OCP with World
Bank standards is a condition of its financing which, if violated, could
trigger a recall of the OCP loans. The summit participants noted that on
November 7, 2002, two Vice Presidents of the World Bank wrote Andy
Patterson, OCP CEO, reiterating that OCP should either stop claiming
compliance with World Bank standards, or obtain independent verification of
compliance, which to date not occurred.
"The public needs to know that West LB, OCP and finance consortium banks
such as the Italian Banca Nazionale del Lavouro (BNL), continue to make
blatantly false statements that the pipeline meets World Bank environmental
standards. Such statements directly contradict several independent field
studies over the past six months which all documented massive violations of
World Bank guidelines," said Bruce Rich of Environmental Defense, a major US
In response to the egregious lack of environmental and social due diligence
by OCP and West LB, the Sassenberg summit is vowing to escalate the
international civil society campaign to alert investors, governments and
financial rating agencies to the growing financial and reputational risks
of this project. The Sassenberg Summit condemned the OCP Consortium's
attempts to hastily complete pipeline construction, a move which has led to growing
protests by groups in Ecuador as well as in countries where the consortium
companies and supporting banks have their headquarters.
The Sassenberg International Civil Society Stakeholders' meeting took place
at the same time as OCP organized a closed door event in Coral Gables
Florida that OCP has called a "stakeholders' scoping meeting."
"All of the Sassenberg participants agreed that the Florida meeting was just
the latest of OCP's misrepresentations and evasions. Most of the civil
society stakeholder groups who have been involved in this issue were in the
Sassenberg event --- groups with more than a million members from Ecuador
and seven other countries," said Jaroslava Colajacomo, a delegate from the
OCP campaign led by twelve major Italian groups, including Greenpeace and
Friends of the Earth Italy. The Italian Campaign will intensify protests
against Italian OCP financer BNI and Consortium member ENI-AGIP.
Natalia Arias, representing Accion Ecologica, an Ecuadorian national
environmental organization, said "we came here to support the rapidly
expanding international campaign that will carry the concerns of affected
groups in Ecuador who are demanding that investors withdraw from such an
environmentally and socially risky project."
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