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Six Months After Audit Report IFC Remains Out of Compliance At Karachaganak

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On April 25, 2008, the Office of Compliance, Advisor/Ombudsman (CAO) of the International Finance Corporation (IFC) found the IFC out of compliance with its own regulations for toxic emissions at the Karachaganak Oil and Gas Condensate Field in western Kazakhstan. Six months later, the case remains open with the CAO.
For Immediate Release

October 27, 2008


Contact:

English: Crude Accountability
Kate Watters: +1-703-299-0854
kate@crudeaccountability.org

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 Six Months After Audit Report IFC Remains Out of Compliance At Karachaganak

On April 25, 2008, the Office of Compliance, Advisor/Ombudsman (CAO) of the International Finance Corporation (IFC) found the IFC out of compliance with its own regulations for toxic emissions at the Karachaganak Oil and Gas Condensate Field in western Kazakhstan. Six months later, the case remains open with the CAO because the IFC has failed to bring into compliance significant failures in the IFC’s environmental monitoring of activities at the Karachaganak field. For all intents and purposes, the IFC is ignoring the violation of its standards at Karachaganak.

Specifically, the audit report found noncompliances in stack emissions and ambient air quality monitoring programs at Karachaganak. The report stated, “The CAO finds the monitoring program and the data reported on stack emissions insufficient in order to verify compliance with IFC requirements,” and concluded, “neither the ambient air quality monitoring program nor the data reported from the monitoring to date verify compliance with IFC requirements.”

”KPO continues to flare gas, which pollutes the air and harms the health of Berezovka residents. Neither the company nor the local authorities have made any concrete decisions in response to our complaints,” commented Svetlana Anosova, leader of the Berezovka Initiative group.

According to IFC policy, when a project is found out of compliance, the complaint about its activity stays open until the project is brought into compliance. No such efforts are recorded on the CAO website, the mechanism through which the public is informed about these changes by the IFC.

In 2002, the IFC provided $150 million in loans to Russia’s Lukoil, a member of the international consortium, Karachaganak Petroleum Operating, BV, which also comprises Chevron, British Gas and ENI/Agip. Villagers near the field have complained about inadequate monitoring and health problems among the nearby populations since the exploitation of the field began, and the village of Berezovka found itself inside the “Sanitary Protection Zone,” a five kilometer area surrounding the field, inside which no-one should live, according to Kazakhstani law. In 2004, village residents filed a complaint with the CAO, claiming that the IFC investment was harming their health because of emissions from the field. Two additional complaints were filed with the CAO in 2007 and 2008 seeking relocation and compensation for the villagers, who can no longer safely live in Berezovka due to environmental and health damages from the Karachaganak field. The CAO conducted the compliance audit as part of the first complaint, the results of which were published in April 2008.

In addition to violating IFC regulations, the Karachaganak Field was at the center of a 2007 corruption case in which the US oil services company Baker Hughes, a subcontractor of KPO, was found guilty by the US Department of Justice of violating the Foreign Corrupt Practices Act for bribing a Kazakhstani government official in order to win a lucrative contract with KPO at the Karachaganak Field.

The full text of the CAO’s report is available at: www.cao-ombudsman.org.

For more information about the IFC’s violations at Karachaganak or the campaign for environmental justice in Berezovka, go to www.crudeaccountability.org or www.greensalvation.org.