ECGD's support for the BTC pipeline
Trade and Industry Committee Inquiry into Implementation of ECGD's Business Principles
first published 4 April 2005
Following a Sunday Times article, the UK Parliament's Trade and Industry Committee held an inquiry in 2004-5 into support provided for the BTC pipeline by the UK's export credit agency, ECGD, focusing on allegations about the anti-corrosion coating chosen to seal the joints of the BTC oil pipeline before it was buried.
The Baku Ceyhan Campaign submitted a Memorandum in which it concluded that:
- The due diligence carried out by the UK's export credit agency, ECGD, of the BTC oil pipeline was insufficiently rigorous. It relied on the project sponsor, oil multinational BP, for information and reassurances over the many detailed concerns raised by independent parties.
- ECGD's monitoring procedures failed to alert the Department to a range of problems, notably those connected with the field joint coating system. The coating problem constitutes a clear material threat to the project's timing, safety and viability. BP should have reported the coating's failures to ECGD.
- ECGD's human rights due diligence took insufficient account of the context in which the project was being implemented and the abuses that were likely to result;
Michael Gillard (a journalist who has investigated BP's worldwide operations for many years and who wrote the Sunday Times article) submitted a Memorandum detailing failures of the coating, BP and ECGD.
Derek Mortimore (the BP consultant whose warnings of the dangers of using the selected coating were ignored) provided detailed technical information about the coating's failures.
A Memorandum by independent corrosion engineer John M Leeds stated that BP's technical specification for the coating was "totally unsatisfactory to be issued by a professional company such as BP". He quotes a BP spokesperson stating that BTC is the first time the coating has been used as "proof that this expensive pipeline was being used as a test bed". From BP's point of view, Leeds concludes, that "must be a silly situation to be placed in".
In its evidence to the Inquiry, ECGD admited for the first time that the coating was entirely experimental. Giving oral evidence to the Inquiry, ECGD official Mr Gotts said, "It is the first time it has been used on a pipe with the polyethylene coating”. It had never been properly tested. It also emerged that, following ECGD approval of the project, a survey revealed that over one-quarter of the pipeline in Azerbaijan had been affected by cracking of the coating.
The Committee's Inquiry released several internal reports, including an assessment by independent engineering consultant WorleyParsons, which warned that it had “major concerns” about the integrity of the coating being used on the Azerbaijan and Georgian sections of the pipeline.