Case story

  • Kazakhstan

Parties

CAO Case - Kazakhstan / Lukoil Overseas-01 / Berezovka

Crude Accountability Complaint Regarding Lukoil Overseas Karachaganak B.V., Kazkahstan 2004

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Story

The Lukoil Overseas Project is an IFC-financed investment to develop the fields and increase crude oil and condensate production in the Karachaganak Oil and Gas Condensate Field in the Western Kazakstan Oblast. CAO has received three complaints in relation to this project. In September 2004, Crude Accountability, an NGO based in the United States, lodged a complaint with CAO on behalf of residents of Berezovka. The complainants, who are seeking relocation of the village, raised concerns about the health and well-being of Berezovka residents related to air emissions and quality of drinking water.

CAO Action

CAO’s Assessment Report was completed in April 2005 and found that health and air quality data not made available previously, ought to be released to the public and that without baseline data, it is difficult to distinguish the health and environmental effects of the current project from those unrelated problems caused previously. In February 2006, CAO released a progress report that recommended a process for establishing a multi-party monitoring initiative. Both parties’ responses indicated their lack of willingness to engage in a collaborative process and therefore in August 2006, CAO closed the complaint and transferred the case to CAO Compliance for appraisal for audit. In its Appraisal Report of April 2007, CAO Compliance determined that the issue related to emissions to air satisfied the requirements for further investigation in the form of an IFC audit. In contrast, CAO Compliance deemed the other issues related to water quality and relocation did not fulfill the audit criteria.

Outcome

Case Status: Open

In its Audit Report, completed in April 2008, CAO found IFC to be out of compliance on issues related to how IFC assured itself that emissions to air from the Karachaganak Project complied with IFC requirements. The CAO will monitor the situation until such time as actions by IFC assure CAO that IFC will fulfill its compliance obligations. In January 2009, Lukoil ended its contractual obligations to IFC by prepaying its outstanding balance and therefore ending IFC’S obligations to assure itself of project performance. Nevertheless, IFC remained concerned, and engaged directly with the project to verify compliance. A monitoring report of January 2009 listed the issues related to the Project’s performance reporting that remain outstanding as being reporting of stack emissions; completeness of ambient air quality monitoring programs; and adequacy of the selection of ambient air quality monitoring sites. In January 2009, the project committed to an action plan that, if adhered to, will resolve all outstanding issues. Therefore this case will remain open and CAO will continue to monitor until such time as all agreed items have been acted upon.

References

CAO case story page: http://www.cao-ombudsman.org/cases/case_detail.aspx?id=104

Contributor(s): This article was modified by Nicolaclayre (4), Pic1 (2), and Kyle (1).

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