Crude’s Congressional Testimony May 13, 2004

TESTIMONY TO THE SENATE FOREIGN RELATIONS COMMITTEE MAY 13, 2004

Karachaganak Field, Kazakhstan:
The World Bank Contributes to Poor Environmental Health and Supports Corrupt Local Officials

May 13, 2004

The World Bank’s mission, as chiseled in the entryway of its headquarters in Washington, DC, is to create a world without poverty. Loans provided by the World Bank’s private lending arm, the International Finance Corporation (IFC), are bound by the same mission, and should, “promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives”.

In 2002, the IFC provided $150 million in loans to LUKoil, a member of Karachaganak Petroleum Operating BV (KPO), the consortium working at the Karachaganak oil and gas condensate field in western Kazakhstan. Karachaganak is one of the largest petroleum fields in the Caspian region, and is operated by British Gas, ENI/Agip, Chevron Texaco and LUKoil. Karachaganak is estimated to hold over 1200 million tons of oil and condensate and 1.3 billion cubic meters of gas. Not only is oil and condensate extracted from the field, but also refined on-site. The condensate is transported from the field through pipelines to Orenburg, Russia; the oil is piped to Aktau, Kazakhstan where it joins the Caspian Pipeline Consortium pipeline and is then carried thousands of miles to Novorossisk, Russia to be shipped by tanker to the west.

The village of Berezovka, which is home to 1,286 residents, is located 5 kilometers from the Karachaganak field. A former collective farm, the village is now home to many of the construction workers building the refinery and other parts of the facility at Karachaganak. According to Kazakhstani law, which stipulates a five-kilometer “sanitary protection zone,” the villagers should be eligible for relocation from the site near Karachaganak because of exposure to toxic chemicals produced at the field. However, KPO has decreased the sanitary protection zone to 3 kilometers, effectively barring the Berezovka villagers from relocation, because of the consortium’s claim of “superior technology” at the field.

Although independent testing shows that Berezovka suffers from dangerously high levels of lead, cadmium and vanadium, the IFC and KPO have failed to provide local residents with environmental monitoring data taken in the village. Villagers allege that the local police threaten individuals who speak out against the Karachaganak project. Svetlana Anosova, the leader of an initiative group in the village working to achieve relocation, was threatened by local police when she returned from Washington, DC last summer, where she met with World Bank and IFC officials about the plight of her village. Rather than receiving support from the Bank, Ms. Anosova was told by one executive director, “there are winners and there are losers in this world, and you ladies are losers.” Repeated requests for additional environmental health information have been denied and the village doctor who gathered data about increasing medical problems in the community was fired after speaking with US environmental activists who traveled to the village in the winter of 2002. When questioned by Berezovka activists about their decision to lend $150 million to the project, IFC officials replied that they had not considered the effect on the village when they did their initial study of the environmental risks at Karachaganak.

An independent environmental health survey conducted by the villagers, indicates that almost 50 percent of the village population is chronically ill. The health study revealed that 688 members of the adult population suffer from headaches and memory loss. Five hundred and ninety-nine have muscular-skeletal problems, 423 suffer from significant hair loss and are losing their teeth; 413 suffer from vision loss; 401 have cardio-vascular difficulties; 375 have serious gastroenterological problems; 308 have upper respiratory illness; and 260 suffer from skin ailments.

The villagers, led by Ms. Anosova, also conducted a survey of 100 high school students in the village and discovered that 95 of them suffer from overall weakness, 83 regularly experience severe headaches, 77 suffer from memory loss and have frequent fainting spells, 67 have skin ailments, 49 experience feelings of aggression and 34 suffer from regular nose bleeds. Among 80 middle school children (ages 7 to 10) whom Ms. Anosova surveyed, 45 have frequent headaches, 38 suffer from frequent stomach aches and weakness, 29 have skin ailments, 24 suffer from memory loss, and 21 suffer from regular chest pains.

According to US environmental health specialists Linda Price King and Dr. Janette Sherman, many of the villagers’ health problems are consistent with exposure to toxic chemicals, including hydrogen sulfide, carbon monoxide, carbonyl sulfide and other by-products of petroleum extraction and processing. Villagers who have sought treatment for their ailments report that when they leave the village, many of their symptoms decrease dramatically or disappear altogether, making diagnosis and treatment difficult. However, when they return to the village, their symptoms immediately recur.

Denial of access to the environmental data the villagers request from the World Bank, KPO and the Kazakhstani government is a violation of the Aarhus Convention, to which Kazakhstan is a signatory, and of the World Bank’s own regulations requiring disclosure of environmentally relevant documents to the public. Corruption among local officials, including the village mayor, who is also on the payroll of KPO, has been ignored by both KPO and the World Bank. The World Bank should not provide public funds to governments and corporations engaged in activities that do not comply with World Bank standards and whose activities contribute to poverty and illness in local communities. The Extractive Industries Review has demonstrated time and again that World Bank financial support of oil, gas and mining only contributes to poverty, environmental degradation and increased corruption. Such is the case at the Karachaganak field.

For more information about the Karachaganak case, contact:
Kate Watters, Executive Director, Crude Accountability
at 703-299-0854 or kate@nullcrudeaccountability.org.