Eucador Pipeline Threatens Amazon Says World Bank Study

For Immediate Release

September 13, 2002

Contacts: Kevin Koenig, Amazon Watch (310) 420-8245

Bruce Rich, Environmental Defense (202) 387-3500

Robert Goodland,

WASHINGTON, DC -- Environmental groups in Germany and the US released a new report today that provides conclusive evidence that the German Bank Westdeutsche Landesbank (WestLB) violated its own policies in loaning $900 million to the OCP Consortium building Ecuador's new heavy crude pipeline. The independent report written by Robert Goodland, former Chief of the Environmental Department of the World Bank, found, ''substantial non-compliance with all four applicable WBG's [World Bank Group] Social and Environmental Safeguard Policies.'' Specifically, the report found violations of World Bank Operational Policies on Environmental Assessment, Natural Habitats, Involuntary Resettlement, and Indigenous Peoples.

Kevin Koenig of Amazon Watch notes that ''the findings are of great significance because WestLB is the lead arranger of $900 million in syndicated loans for the project and has publicly stated that compliance with World Bank environmental guidelines is an 'indispensable condition for any financial engagement' with OCP.''

Bruce Rich of Environmental Defense adds, ''The report's findings raise serious questions whether project finance can continue since WestLB's loan contract with OCP is conditioned on adherence to World Bank standards.'' The Goodland report sharply criticizes the findings of a report commissioned by WestLB in May 2002 in which consulting firm Stone and Webster gave the project a false green light by falsely claiming compliance with World Bank Policies. In some cases the Stone and Webster report even misidentifies what the relevant WBG policies are.

The author, Dr. Robert Goodland, is a tropical ecologist who played a lead role in authoring most of what are now called the World Bank ''Social and Environmental Safeguard Policies'' during his quarter century serving the World Bank Group, namely Environmental Assessment, Natural Habitats, Indigenous Peoples, and Cultural Property Policies. Research for the report was conducted on site in Ecuador in August of this year.

WestLB's financing of the controversial pipeline has sparked public outrage in the German state of North Rhine Westphalia (NWR), which holds a 43 percent stake in the bank and has held parliamentary hearings on the project and sent several delegations to Ecuador to tour pipeline construction.

The pipeline would transport heavy crude from the country's rainforest region to the Pacific Coast, doubling oil production in the Ecuadorian Amazon. It will traverse seven national parks and protected areas, including a World Bank Global Environment Facility biodiversity reserve. The Goodland report documents major threats to biodiversity and indigenous peoples as well as major violations of World Bank policy on resettlement of affected populations. The report is just the latest in a series of setbacks for the project.

The pipeline, shelved for over ten years due to opposition, has been riddled with problems since construction began in 2001. Former OCP President Hernan Lara resigned in August of this year after facing sustained protests from environmentalists and affected communities. Industry estimates show that due to delays from environmental and social controversies, the OCP is nearly $200 million over budget.

According to government sources, the majority of Amazon crude that will flow through the OCP pipeline is destined for markets on the West Coast of the United States. The OCP Consortium includes: Alberta Energy - Encana (Canada), Occidental Petroleum (OXY- USA), AGIP (Italy), Repsol-YPF (Spain), Perez Compaanc (Argentina), and Techint (Argentina). Citibank and JP Morgan Chase have also come under fire for their financial role in the project.


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