Report Alleges Georgia Encourages Pipeline Pipe Dreams

Oil executives and government officials from Azerbaijan, Georgia and Turkey assembled August 1 in London for a signing ceremony that created the Baku-Tbilisi-Ceyhan Pipeline Co (BTC Co.). The incorporation of the pipeline consortium marks a major step forward in the ambitious project to open a new export route for Caspian Basin natural resources. But as construction proceeds, several environmental groups, in a report issued the same day as the signing ceremony, raise concerns about the social impact of the BTC pipeline.

The BTC board August 1 awarded contracts for pipeline construction in Azerbaijan to companies from Greece, France and the United States. According to a statement issued by British Petroleum, the largest BTC Co. stakeholder, the US-based Bechtel will continue to serve as the main engineering, procurement and construction management services contractor. The Turkish state pipeline concern, BOTAS, will help oversee construction of the Turkish sector. In addition to BP, the Azerbaijani state oil company SOCAR, Statoil, Unocal, TPAO, Eni, Itochu and Amerada Hess are stakeholders in BTC Co.

The preliminary impact report, produced by a six-member coalition of environmental groups – including Green Alternative of Georgia, and the US-based Friends of the Earth – focused on the potential impact of BTC construction in Georgia. The report, titled "Azerbaijan, Georgia, Turkey Pipelines Project: Georgia Section, " expresses concern over what it terms a lack of clarity in the BTC's "institutional framework."

"The complex nature of arrangements for local, district and national government involvement has exacerbated tensions and mistrust [among the general population], and leaves communities confused as to from whom they should seek social commitments, project monitoring, dispute settlement or possible redress," the report says.

The report, based on a fact-finding mission conducted June 10-13, suggests politicians and corporate staff have thus far conducted insufficient outreach efforts. It additionally claims that the general public does not have adequate access to the Host Government Agreements, which codifies policies concerning safety assurance and land compensation. Researchers for the environmental coalition found that a dearth of information about the BTC project – as well as a separate BP effort, the South Caucasus Gas Pipeline Project – may be fueling unrealistic expectations among the general population.

"Many affected people are not even sure of the exact pipeline routes, nor have landowners been provided with clear information about compensation," the report stated. "Employment figures [for local hires to work on pipeline construction] are vague, feeding rumors and false expectations."

BP says in a draft Public Compensation and Disclosure Plan that paid consultants will help BTC Co. appraise land, analyze local conditions, and deal with citizens whose land the project decides to buy. But the environmental coalition's report describes a more haphazard process. "Companies have directly approached individual landowners without informing local [as opposed to district] administrations," it says.

The report raises broad questions about public awareness of the ramifications actual pipeline construction. BP's Environmental and Social Impact Assessment says its stakeholders include "community groups" and advocates including Green Alternative, as well as people who live within two kilometers of the pipeline or five kilometers of a work camp. But the fact-finding team reported widespread confusion over what the project would do and how it would change peoples' lives. The project's public disclosure telephone line, the team says, uses a cell-phone number that costs callers some money rather than a toll-free one.

"It is true that [state agencies] and BP has tried to communicate with locals about their rights concerning the land values," says a consultant who has worked on Georgian pipeline issues (but is not working on the projects at hand). "But people are so backward and poor, they require a lot more help. The government could have done more."

The environmental coalition report specifically voices caution over pipeline plans in the Borjomi district. The area is home to a large nature reserve and to mineral water springs that serve as the foundation for significant employment and tourism. The bottling of Borjomi mineral water is a major source of employment for the local population. "The presence of the project [near] the nature park and the mineral springs could damage the image of the mineral water industry, which has always been based on the intactness of the area where the mineral springs are located."

Environmentalists are perhaps most critical of the conduct of government officials, who are allegedly hyping expectations about the pipeline's financial windfall and social benefits. "The company [BP] is fairly clear that no oil and gas will go for domestic use, but makes reference to work with the [Georgian] government to assist with the provision of energy through other means," says Friends of the Earth spokesperson Carol Welch. "It seems mostly governments are promising the moon but BP doesn't correct them vigorously, it doesn't seem."