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Oil addicts find new veins as BTC pipeline finally opens

Tbilisi, Georgia --The day before state dignitaries, oil men and bankers from around the world gather for the grand launch party in Turkey of BP's more than one year delayed Baku-Tbilisi-Ceyhan (BTC) pipeline, campaigners who have monitored the BTC project are charging BP and participating international financial institutions (IFIs) with failing affected communities and the local environment. The campaigners say that the onus is now on the IFIs to stand up for affected communities on the receiving end of BP's botched job.

Despite BP's many promises of social development and environmental protection, and the labelling of BTC as a “development project” by the World Bank's International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), local people's lives have been blighted by intimidation, social and economic disruption, infrastructure damage and pollution throughout the construction of the BTC pipeline.

The construction process for BTC, BP's flagship pipeline which has amassed cost overruns of USD 1 billion (32 percent over budget), has been dogged by construction failures and malpractice. With leaks likely and security forces increasing their patrols, the future holds little promise of improvement for affected people in Azerbaijan , Georgia and Turkey .

Civil society organisations from BTC-affected countries, Europe and the US have collated the evidence from their monitoring reports and investigations from the last four years. It paints a desperate picture of destruction, abuse and betrayal. [1] Just last month the IFC's Complaints Advisory Ombudsman threw out twenty complaints lodged by BTC-affected residents in Georgia on the grounds that they could do no more.

Manana Kochladze, of Tbilisi-based group Green Alternatives and Caucasus coordinator for CEE Bankwatch Network, said: “The public banks have made up their minds that BTC is an unmitigated success story, which is certainly half true as a lack of mitigation of the project's impacts has been a feature over the last five years and continues today. Horrendous testimonies abound along the pipeline route of unpaid compensation, prostitution and trafficking and commitments to reduce poverty and create quality jobs that have not materialised. Time and again we are seeing that when local people turn to the grievance mechanisms of the banks for help, the banks turn round and say, ‘Sorry, we can't help', usually for bureaucratic reasons.”

Environmental problems and regional tensions posed by BTC are also set to increase as the project's profitability is now reliant on oil from Kazakhstan, with around 3 million tons to be exported via BTC from autumn this year, and 7.5 million tons annually thereafter. Despite the project's promoters claims that Azeri oil would be sufficient for the 40 year lifetime of BTC - while it was clear that this was never going to be the case - the Caspian Sea is now set to take the BTC strain and the undiscussed environmental impacts.

Mika Minio-Paluello, Oil & Finance officer for PLATFORM, commented “This shipping of Kazak oil across the Caspian Sea was not publicly factored into the BTC plans nor did it feature in the due diligence of the banks that financed BTC, despite NGOs raising the issue repeatedly. One of the key selling points of BTC was that it would not add to tanker traffic through the Bosphorus – but now the strain will be transferred to the Caspian.”

Ahead of this weekend's G8 summit in Saint Petersburg , Graham Saul, International Program Director for Oil Change International, said: “Rather than fighting climate change and working to overcome oil dependence, G8 governments and the World Bank are handing out billions of dollars in subsidies to the global oil industry and projects like BTC. You just can't do this and then turn around and ask the world to believe that you are serious about overcoming energy poverty and fighting climate change, yet that is exactly what the G8 is planning on doing this weekend in Saint Petersburg. We need a new energy revolution, not another generation of oil wars, volatile prices and rising temperatures.”


For more information, contact:

Manana Kochladze

Green Alternatives/CEE Bankwatch Network

Tel: +995 99 91 6647

Email: manana at


Mika Minio-Paluello


Tel: +44 (0) 7766175641 or +44 (0)20 74033738


Graham Saul

Oil Change International

Tel: +1-613-558-3368


Notes for editors:

Combined the EBRD and the IFC have provided project finance of USD 500 million for the BTC pipeline project. Taking their lead from the public development banks, international export credit agencies have provided a further USD 1.36 billion of public money guarantees for the project, notably with USD 580 million coming from the Japanese Bank for International Cooperation, USD 160 million from the US's Export-Import Bank, and USD 100 million from the UK's Export Credit Guarantees Department

The Sustainable Energy & Economy network has estimated that over the next 20 years, based on its planned capacity, the BTC pipeline will contribute to the emission of 3100 million metric tons of CO 2, equivalent to 10 years of France 's current emissions or 25 years of Argentina 's.

Findings by the civil society organisations that continue to monitor the BTC project include:

  1. Economic distortion
    The Azeri economy is increasingly dependent on the oil sector, despite repeated commitments from the international development banks to help “diversify” the economy. Poverty (40.2 percent) and unemployment (14-20 percent) remain high, while the dominance of the oil sector seems to be causing signs of “Dutch Disease” - where the loss of competitiveness of a nation's economy occurs as a result of a natural-resource-inspired boom. This raises the value of the domestic currency, making manufactured goods (e.g. traditional exports with added value components) less competitive while increasing imports. Dutch Disease tends to stymie development for economies in Azerbaijan 's position.
  2. Human rights and intimidation
    There have been pipeline-related human rights abuses and intimidation by security forces along the route. Journalists have been arrested in Azerbaijan, villagers beaten and hospitalised by riot police in Georgia and pipeline critics intimidated, arrested and tortured by the gendarme in Turkey, with one human rights defender - Ferhat Kaya - repeatedly arrested and allegedly tortured .
  3. Failure to compensate
    There has been a systemic failure to compensate affected villagers and communities for lost land, polluted water supplies and damaged homes and infrastructure.
    In 2005, 30% of Georgian land claims remained unsettled. Homes in Tetritskaro, Sagrasheni and Dgvari were damaged during construction through the use of explosives, heavy vehicle traffic and landslides; home- owners have not yet been compensated. The village of Tsemi in Georgia lost its water supply and thus its main source of income – tourism.
    Where compensation has been paid, assessments of land value have been extremely low. Turkish villagers have produced evidence of receiving less than the value of a box of cigarettes per square metre of productive land.
  4. Local energy provision
    Many villagers living along the pipeline route remain without electricity or gas, while up to a million barrels of crude oil flow under their fields every day. The BTC pipeline transports crude oil from the Caspian to the Mediterranean, for on-shipment to Europe and the US .
  5. Lack of employment
    False promises of employment from their governments and BP have left local communities feeling angry and betrayed. Few jobs went to local residents; those that did were temporary and poorly paid.
  6. Prostitution and trafficking on the increase along the pipeline
    In Azerbaijan and Georgia , the BTC project has led to increased prostitution and trafficking along the pipeline, has introduced new health problems and has worsened socio-economic conditions for women. Despite the pledges of the project sponsors and lenders, it has failed to increase women's access to natural resources and improved infrastructure, has not provided employment and permanent income, nor has it empowered women to participate in decision-making.
  7. Construction failures
    The future safe operation of BTC has been jeopardised by cost-cutting, incompetence and the use of inappropriate materials. Whistleblowers and senior experts believe this could lead to a major oil leak that would devastate one of the world's most environmentally sensitive areas.
    • BP used an inappropriate anti-erosion coating (SPC 2888) with no track record on plastic-coated pipelines. An internal BP report produced by coatings expert Derek Mortimer warned that SPC 2888 would not ensure waterproofing and leave the pipeline at risk of erosion. By February 2004, 26% of joints welded and coated in Georgia were known to have developed cracking problems.
    • Former senior workers contracted to work on the Turkish section revealed that there were insufficient checks for the pipe buckling in earthquake zones, crucial welding work often failed inspections, builders cut off villages' water supplies and allowed oil leaks. Documentation was not properly kept and problems with the quality of the work were covered up; those who complained were sacked or made to leave.