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Anger grows across the world at the real price of ‘frontier oil’

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Far from the Gulf of Mexico, campaigners are accusing energy companies of destroying land and livelihoods in the search for increasingly scarce resources

A woman hurries away from the heat of a gas flare near a flow station belonging to Shell in Warri, Nigeria. Photograph: George Osodi/AP

Richard Wachman and John Stibbs Sunday 20 June 2010

The eyes of the world are on BP after the disaster that left oil spewing into the Gulf of Mexico at the rate of 50,000 gallons a day. But campaigners accuse Big Oil of an appalling track record elsewhere in the world, saying it leaves a trail of devastation in its wake.

From Nigeria to Kazakhstan in Central Asia, and Colombia and Ecuador in South America, the oil majors stand accused of a blatant disregard for local communities and the environments in which they operate.

With demand for energy expected to surge as industrialisation accelerates in China, India and Brazil, critics say oil companies are taking ever-increasing risks to cash in on yet another bonanza.

Two other factors ensure the dash for oil continues apace. One is growing concern in the developed world that, at some point in the next 30 years, demand could outstrip supply. That means governments are under pressure to make it easier for firms to look for oil in inhospitable areas, whether in deep water off the US or in the tar sands of Canada.

Secondly, western governments want to reduce their dependence on unstable regimes in the Middle East, which partly explains the recent US move to lift restrictions on drilling in Alaska.

All this could change if the world made a determined attempt to invest more heavily in renewable energy sources, but international initiatives take time. In the interim, the oil majors face a barrage of criticism from environmental and human rights campaigners in places thousands of miles away from BP’s sunken Deepwater Horizon rig.

Nigeria is a case in point. People who live in the Niger delta have had to withstand huge oil spills for decades. Farmers allege that spills from Shell pipelines have contaminated their land and fishing ponds, and have destroyed their livelihood. They want Shell to clean up the mess and compensate them for lost earnings. Shell argues that the ruptures to its supply lines are, in the main, the result of sabotage, and that any damages claims should be heard in the Nigerian courts.

The Anglo-Dutch oil giant is by far the biggest oil firm operating in the delta – where, in March 2008, it was estimated that at least 2,000 sites required treatment because of oil pollution. Independent oil and environmental experts estimate that between 9m and 13m barrels of oil have been spilt in the delta area during the past 50 years – equivalent to an Exxon Valdez disaster every 12 months.

Kate Allen of Amnesty International says: “The result of oil exploration, extraction and spills is that many people in the Niger Delta have to drink, cook with, and wash in polluted water; they have to eat contaminated fish – if they are lucky enough to still be able to find fish – and farm on spoiled land.”

She adds: “After oil spills, the air reeks of pollutants. Many [people] have been driven into poverty, and because they can’t make Shell accountable for its actions, there is enormous distrust between the group and local people.”

A spokesman for Greenpeace says: “Shell operates in 100 countries, but about 40% of spills are in Nigeria, which is quite incredible. There is evidence of sloppy management.” Shell rejects these charges.

The actions of the Nigerian government are a critical part of this story. Oil is estimated to have earned Nigeria more than $600bn since the 1960s, and the oil and gas sector represents about 80% of government revenues; the government’s reluctance to take a hard line with oil companies is not difficult to understand. The most that local people often ever see of the state are armed soldiers visiting the region to protect oil companies’ assets.

A similar story is unravelling in Colombia, where BP has a presence in the Casanare region. Strikers recently blockaded a plant, 125 miles from the capital Bogotá, for a fortnight, prompting BP officials to say they felt like hostages. The dispute has been rolling on since February over issues including labour, the environment and human rights. Most of these have now been resolved.

Cinep, a Colombian NGO that investigates oil companies, says the strike was not marked by the extremes seen in previous BP disputes. Its representative Fernando Rodríguez says: “Disputes involving BP are characterised by a heavy hand and shows of government force.”

Rodríguez alleges that in a 1995 dispute with BP contractor Servipetrol, the army shot at the civilian population. He claims paramilitaries then persecuted and assassinated community leaders.

BP strongly denies any paramilitary connections. Poly Martinez, a media spokesman for the company, says: “BP has no relation whatsoever with illegal armed groups, irrespective of their motives or inclinations.” BP did acknowledge it had had to deal with officials in elected positions who had turned out to have paramilitary links.

In Kazakhstan, Friends of the Earth is worried about the environmental, social and health effects caused by the development of the Kashagan oilfield. The consortium behind the project includes companies such as ExxonMobil, Shell and Italy’s ENI. Friends of the Earth said thousands of people have already been relocated in the region because of sulphur emissions and other highly poisonous chemicals such as mercaptans, which are present at high levels in northern Caspian oil. All the companies deny they have behaved irresponsibly.

In Ecuador, the Amazon Defense Coalition claims Chevron holds the record for the world’s largest oil-related contamination in the populated Amazon rainforest – an even more sensitive ecosystem than the marshes of Louisiana. The allegations are at the root of a class action lawsuit in Ecuador where the oil giant faces more than $27bn in damages for poisoning an area the size of Rhode Island with 18.5bn gallons of toxic “produced water” – water that emerges from drilling activities. That is more than 474 times the amount of contamination estimated to have been spilled in the Gulf of Mexico, according to claims by representatives of the plaintiffs.

A bigger campaign is building behind the involvement of the oil majors in Canada’s tar sands. The sands are naturally occurring mixtures of sand or clay, water and a dense form of petroleum called bitumen. They are found in large quantities in Canada and Venezuela. Making liquid fuels from oil sands requires energy for steam injection and refining. This process generates two to four times the amount of greenhouse gases per barrel of final product as conventional oil.

A spokesman for FairPensions, the shareholder activist group, says: “Every day the extraction process uses enough natural gas to heat 3.2m Canadian homes for a day. Tar sands are a significant factor in Canada’s failure to meet its Kyoto protocol targets.”

It is also claimed that tar sands development affects the health and human rights of people over wide areas. According to FairPensions, about 11m litres of contaminated water leaks into surrounding rivers and groundwater each day, containing arsenic, mercury and various carcinogens that have been linked to elevated rates of cancer in downstream communities.

Investors have raised the issue at Shell and BP shareholder meetings; some shareholders are worried about the long-term profitability of tar sands, pointing to the very high operating costs.

But the oil companies are “as likely to curtail their hunt for new sources of energy as turkeys voting for Christmas”, says Friends of the Earth. It points out that only last week, Cairn Energy won clearance to drill off Greenland this summer. Greenland is viewed as one of the last great frontier areas in the oil and gas business, and the US Geological Survey estimates that the territory could hold 50bn barrels of oil and gas.

But campaigners point out that the region is under “constant threat of ice floes”, while in Canada, MPs complain that Cairn has had no history of drilling in the Arctic. The company says it has “prepared for every eventuality”.

According to Canadian energy economist Peter Tertzakian: “We are going to the ends of the earth to find the next barrel.” But at what cost? Environmental pressure group Platform says the drive for “frontier oil” comes out of “a political environment whereby concerns over energy security are routinely top of the agenda”. To illustrate its point, Platform points out there has been a quickening in the race for rights to territory in the Arctic, with the Russians two years ago symbolically planting a flag under the North Pole during a submarine expedition.

But the last frontier is perhaps Antarctica. Signatories to the Antarctic Treaty officially refrain from any territorial claims on the continent, but some countries, including Britain, Australia and Russia, have made unofficial claims and produce stamps with maps of Antarctica showing territory purportedly belonging to them.

The worldwide dash for the black stuff underscores Tertzakian’s argument that though we may not soon run out of oil, “new supplies will be increasingly dirty, insecure, expensive and indiscreet”.

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