UK backs loans for very deep Brazilian offshore oil drilling
ECGD's assessment of Petrobras P-52 oil production platform
first published 1 July 2010
A UK government department is underwriting loans taken out by the Brazilian state-run energy company, Petrobras, for an offshore oil production platform operating in the Atlantic Ocean in even deeper waters than those in the Gulf of Mexico where BP's exploration well is spewing forth oil after the Deepwater Horizon drilling rig exploded and sank in April this year.
The $52 million loan underwritten by the Export Credits Guarantee Department (ECGD) in 2005 are for a semi-submersible oil production platform operating in the Campos Basin in 1,798 metres (5,900 feet) of water -- the Deepwater rig was drilling at a water depth of 1,260 metres (4,130 feet).
The Brazilian offshore oil and gas reservoirs are considered to be among the most hazardous in the world to access (see The Guardian). The P-52 Petrobras rig replaced one that exploded and sank in 2001, killing 11 people.
The Business Principles Unit of the UK's Export Credits Guarantee Department (ECGD) summarised its assessments on 1 July 2005 of the environmental, social and human rights aspects of the Brazilian oil production platform, undertaken as part of its underwriting due diligence.
The summary was released in 2007 following a Corner House information request, but the Unit's actual assessment of the risks, potential environmental impacts and recommendations were all omitted.
The Corner House requested the assessments from ECGD in September 2006 (under the Environmental Information Regulations 2004 and Freedom of Information Act 2000) after ECGD had listed in its 2005-06 Annual Report the financial guarantees it had given to four UK companies -- Rolls-Royce Power Engineering, VWS Westgarth, Koch Chemical Technology Group and Invsat -- who were supplying services to Petrobas Netherlands, the Dutch subsidiary of the Brazilian oil company, as part of the $900 million P-52 platform.
ECGD replied in June 2007, indicating that it had excluded the author's opinions of the impacts and other information on the grounds that releasing the information would "prejudice . . . the effective conduct of public affairs" -- in future assessments, officials might not "provide frank opinions and evaluations" or make "a candid and rigorous assessment of all risks relating to a particular case" if they knew they might be publicly disclosed; instead they would be "more circumspect in expressing their assessments".
ECGD also indicated that disclosing some of the information could compromise its future cooperation with other export credit agencies.
But just last month, ECGD confirmed to journalists that it had never undertaken any assessment of the risks of a blow-out, whether the platform's safety valves were adequate or of its emergency response plan -- it claimed that it was not under any duty to do so.
Under new rules introduced by the Department in May this year, ECGD no longer carries out any assessment or screening of underwriting requests if an exporter's share of a project is worth less than approximately £10 million. Three of the four UK exporters supported in this Brazilian oil platform would fall into this category. See "Court action to stop UK government department lifting ban on child and forced labour"