BP may receive as much as $500 million from the World Bank to expand oil output in Azerbaijan and build a 1,100-mile trans-Caucasus pipeline. The loan would boost a US goal of keeping the oil away from Iran, which the State Department says is a sponsor of terrorism. The IFC may back the $2.9 billion pipeline which would stretch from Azerbaijan’s capital to Turkey within the next year. Companies involved include Unocal and TotalFinaElf.
The World Bank claims it will ensure that environmental standards apply during the construction. But similar projects have cast doubt on the Bank’s ability to promote sustainable development by financing oil, gas and mining projects. The Baku-Supsa pipeline in Georgia and Azerbaijan illustrates such problems. CEE Bankwatch network says the $1.98 billion pipeline fuels income disparities, is a threat to the environment and entails heavy dependence on oil prices for the countries concerned.
These concerns are typical of World Bank supported projects in oil, gas and mining. Staff of the Extractive Industries Review (EIR), World Bank staff and NGOs gathered in Budapest in early July to debate the rationale for and consequences of World Bank involvement in this sector. This was the second of a series of regional consultations (see “NGOs discuss perils of Bank engagement“, Bretton Woods Update 28). While the EIR admits oil, gas and mining activities have “not yet” achieved sustainable development and poverty reduction, NGOs complain that the entire revision process focuses mostly on how the World Bank should improve its way of doing business in this sector, without discussing possibilities of a withdrawal. “Virtually all of the discussions revolved around how the Bank should do projects better, not whether or not they should”, said Steve Kretzmann of the Institute for Policy Studies after the meeting. The EIR is currently scheduled to present its final report to the World Bank in June of 2003.