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«Complaint Regarding the Lukoil Overseas Project (Karachaganak Oil and Gas Field) Burlinsky District, Western Kazakhstan Oblast, Kazakhstan April 15, ...»

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• report to the public on the effectiveness of these investments.

• ensure easy public access to redress from project and non-project grievance mechanisms.

12 Complaint Allegation III: Was the reduction in the Sanitary Protection Zone justified?

The Sanitary Protection Zone (SPZ) is a roughly circular area extending out up to 5 km from an industrial facility, or in the case of KOGCF, field border; an SPZ is mandated by the Government of Kazakhstan (GoK) environmental law for all industrial installations. The local Akim’s office reduced the Sanitary Protection Zone (SPZ) applied in the case of KOGCF (from 5 km to 3 km).

Complainants believe that this action was influenced by KPO in order to preclude the necessity of resettling the residents of Berezovka, which is partly located within the SPZ.

The SPZ designation, while invoked under Kazakh environmental law for all industrial facilities, can vary in size, based on the technology employed in the particular industrial development. The SPZ originally designated for the Karachaganak field was 5 km; this was based on Kazakh legislation that mandates a 5 km SPZ for gas fields if hydrogen sulfide (H2S) concentrations in the gas are over 2% (Karachaganak H2S gas concentrations are from 4% to 4.3%). However, in December 2002, the SPZ was reduced to 3 km, which included a 1.5 km KPZ plus an additional 1.5 km “no encroachment” zone. The SPZ was reduced because, according to Kazakh law, if a field emits less than 0.5 tons per day (T/d) H2S and has a low content of volatile hydrocarbons, its zone can be reduced to a minimum of 1 km. The decision regarding the size of the SPZ for large industrial extraction complexes in Kazakhstan is based on calculations of the pollutant atmospheric dispersions, of maximal accidents and emergencies, as agreed by the Kazakhstan’s chief sanitary inspector. The northern section of the village of Berezovka was within the 5 km SPZ but, according to the ESIA, will not be considered part of the Field SPZ, “provided that new drilling does not occur in the territory near Berezovka settlement.” The Complainants base their request for resettlement on the fact that Berezovka is located in the original SPZ. Another village which had been located within the original SPZ, Tungush, had been resettled by the GoK using funds borrowed from KPO against future oil and gas royalties. The Complainants contend that since Berezovka lies within the original SPZ, as did Tungush, they should be relocated and compensated by KPO for their health problems. They also cite a letter (dated 29 May 2002) from an official of the Ministry of Natural Resources and Environmental Protection to the village residents, endorsing their eligibility to be resettled. This letter confirmed that Tungush and Berezovka are located within the SPZ, were characterized by an adverse environmental situation, and that both villages should be relocated. It is unclear whether the official who issued this letter had the authority to make this assertion.

Tungush had first petitioned for resettlement over 14 years ago, to the then Soviet Government.

Tungush residents had reiterated their willingness to relocate with the assistance of KPO and the Western Kazakhstan Oblast. The government approved this request and asked KPO to implement it. As a result, KPO has become implicated in the resettlement although it was not responsible for it. The Tungush resettlement was carried out by KPO 27 May 2003. KPO has indicated that although IFC guidelines on resettlement are not technically applicable (as this was a voluntary resettlement), the relocation of Tungush residents was carried out in accordance with Kazakh law and, wherever possible, following IFC Guidelines on resettlement, applying those guidelines as best practice. Most villagers were settled in a single large apartment block in Uralsk, 15 families went to Aksai and others went to Aktube.

KPO undertakes point source monitoring of wells and other installations, to anticipate and prevent incidents rather than depending on the reactivity that the designation of an at-risk zone such as an SPZ assumes. In Kazakhstan, the SPZ allows for air emissions within the defined zone, but restricts new activity in the zone. The decision as to whether current activities and residential areas within the SPZ could be left in place is made on a case-by-case basis.

13 KPO indicated that because of its new point-source monitoring technology,17 the GoK law allows for the reduction in size of the SPZ from 5 km to 1.5 km, plus a 1.5 km “no-encroachment” zone to make an effective SPZ of 3 km. This voluntary “no-encroachment” zone aims at minimizing future problems, providing additional protection against new settlements near field facilities, and securing space in case of future oil- or gas field expansion. In early 2002, following a meeting between KPO and the MoH, a process was established to allow for the size of the SPZ to be reviewed and adjusted; the process entailed an SPZ Size Justification study (2002 Kenesary Study), a MoH led health study, and two town hall meetings with Berezovka villagers18. The decision to reduce the SPZ was made on 24 December 2002 by the MoH of Kazakhstan.

A meeting held in the village on 4 July 2003 by Kazakh local authorities led to a decision supported by the villagers not to resettle but to opt for village improvements. The Complainants, however, have questioned the information provided for the meeting, and indicated that some residents felt that they were manipulated by the lack of transparency. The complainants conceded that not everyone in Berezovka favors resettlement: it depends on an individual’s age and preference for community-based resettlement or individual cash compensation. The CAO was unable to ascertain what proportion of the village seeks resettlement.





CAO Findings

The Complainants see the Tungush resettlement as a precedent and expect KPO to take responsibility for the fact that they have not been resettled (see Appendix 5 for resettlement timeline). There was no technical requirement for the Tangush resettlement as a result of the project’s activities but KPO has become implicated as a result of a request to implement a resettlement plan by the government.

The lack of public disclosure over the size justification studies is not helpful to resolving the concerns raised by complainants. Important questions have been raised about the rationale for revising the SPZ and whether additional risks to inhabitants—such as from the perspective of disaster management or release of other volatile hydrocarbons—have been taken into account.

CAO Recommendations KPO should implement a series of public meetings and develop targeted information to clarify the

following issues:

• The history and rationale of decisions behind the SPZ including all of the factors that have been taken into account with respect to this decision; and

• KPO’s role in the Tungush resettlement;

Wherever appropriate, these meetings should involve the government or other relevant parties as well as the complainants. KPO should work to ensure that there is clarity over the roles and responsibilities of the key parties with respect to changes in the SPZ and resettlement, and that, through discussion, it is possible to achieve written agreements that an understanding on these roles and responsibilities has been reached.

17 Emissions are reduced before they are released.

18 It is unclear to CAO what the dates of these meetings were.

–  –  –

The basis of our complaint is the following: “The Development and Operation of the KOGCF.” A project sponsor, Lukoil, is one of the shareholders of KPO b.v. [Karachaganak Petroleum Operating b.v.].

Our interests have been, and could be, affected by the following social and environmental consequences: as a result of the implementation of the KOGCF with the financial backing of the IFC, we and other residents of the village of Berezovka have experienced adverse health effects from the field: 1) disorders of the upper respiratory tract, the cardiovascular system, allergies, etc.

2) a deterioration in the quality of drinking water from underground sources; 3) the issue of resettlement of Berezovka was dropped from the agenda, despite previous decisions by the Government of Kazakhstan to include Berezovka in the SPZ.

5. [Sic] To resolve these issues, we took the following actions:

1) A house-by-house survey of residents regarding the state of their health in connection with the activities of the KOGCF

2. A written appeal with the signatures of more than 300 residents to V. Ya. Zemlyanov, a member of the Majilis of the RK Parliament; K. Kusherbayev, the akim of Western Kazakhstan Oblast; and RK Prime Minister D. Akhmetov.

3. Publication in the news media of letters summarizing the environmental problems of the residents of Berezovka.

4. A meeting with an executive director of the IFC and the World Bank.

5. A meeting with Senator John McCain.

6. The contact person at the IFC is Sabina Cosic.

7. To resolve these issues, we have kept in contact with the following people: HSE Director Jack Hinton; Sean Brown [sp?]; Antonina Prokhorova; M. S. Shunshaliyev, a member of the Oblast maslikhat [legislature]; S. B. Yerkebayev, akim of Burlinsky Raion; representatives of the U.S.

State Department Eileen Wickstrom, the international NGO Human Rights Watch, the NGO Amnesty International; the NGO Crude Accountability; independent health and environmental experts Janette Sherman and Linda King; the NGO Green Salvation and the NGO in Atyrau called Tan.

9. [Sic] We expect the following decision to be issued regarding this complaint: the residents of the village of Berezovka are to be relocated to an ecologically clean zone.

10. Since we know the mission of the IFC is to fight poverty, we believe that the activities of the IFC-financed KOGCF project cause deterioration in the economic situation of the residents of Berezovka, who do not have a chance to lead a proper existence.

–  –  –

• The average rate of respiratory diseases and infectious and parasitic diseases is higher in Kazakhstan than the European average.19

• Trends in mortality due to cardiovascular diseases are the same as in most other CIS states, i.e. they have risen sharply since 1992.20

• Diet imbalances are reflected in insufficient consumption of animal protein, and a predominance of saturated fats among fats, a risk factor for developing heart disease.

Other diet problems include insufficient consumption of vitamins A and C, and iron.21

• Iron and iodine deficiencies threaten the health of mothers and children; 36% of children under five years old, and all women between the ages of 15-49 suffer some degree of anemia. 22 There is also a high level of thyroid deficiencies.23

• Life expectancy at birth has fallen. As of 2002 it is 58.7 for males, and 68.9 for females, the lowest for any industrialized country except for the Russian Federation.24 In 1989 life expectancy for Kazakh men averaged 63.9, and 73.1 for females.25

• Rates of heavy and/or frequent alcohol use and smoking are very high among middle-aged Kazakh men; rates among women are lower but still significant. 26

• Radioactive and/or toxic chemical sites associated with former defense industries and test ranges throughout the country pose health risks for humans and animals.27

• Annually more than 200 million cubic meters of polluted wastewater are discharged into surface reservoirs. Over 3,000 sources of water pollution have been identified.28

• There is widespread soil pollution from the overuse of agricultural chemicals and salination from poor infrastructure and wasteful irrigation practices.29

• The total area occupied by oil pollution in West Kazakhstan forms 194 thousand hectares, and the volume of spilled oil adds up to more than 5 million tons.30

• Rates of infant mortality and overall mortality rose in the 1990’s, caused by the deterioration of the public health system.31 19 World Health Organization. 1999. Highlights on Health in Kazakhstan.

20 Ibid.

21 Ibid.

22 United Nations International Children’s Fund (UNICEF). 2003. at a glance: Kazakhstan.

23 World Health Organization. 1999.

24 World Health Organization. 2002. WHO Statistical Information System (WHOSIS), Core Health Indicators.

25 Cockerhan, W.C., B.P. Hinote, P. Abbott and C. Haerpfer. Health lifestyles in central Asia: the case of Kazakhstan and Kyrgyzstan. Social Science & Medicine. 59 (2004):1409-1421.

26 Ibid.

27 United Nations Environment Program. 2003. Profile of Kazakhstan.

28 Ibid.

29 Ibid.

30 Ibid.

31 Country Study & Guide. 2004. Kazkhstan. Available online: www.allrefer.com

–  –  –

• Problems of poor sanitation and contaminated water (salinity, toxins and bacteria) have increased in both urban and rural areas. Water filtration and purification systems have broken down in many areas, in rural areas, about half the water supply no longer works.33

• Kazakhstan has very high rates of pulmonary tuberculosis; the incidence was 91.4 cases per 100,000 population (1997), compared to 67.4 in other CIS states, and 13.2 in the EU.34 32 National Institute of Nutrition, Academy of Preventive Medicine of Kazakstan and Macro International, Inc. 1996.

Kazakstan Demographic and Health Survey 1995.

33

European Observatory on Health Care Systems. 1999. Health Care Systems in Transition: Kazakhstan. Copenhagen:

WHO Regional Office for Europe.

34 Ibid.

17Appendix 3: CAO Methodology

Investigation of the Complaint was conducted by CAO staff via: (i) a desk review of project relevant environmental, health and safety, and socioeconomic data provided by the IFC in November 2004;

(ii) consultations with the IFC Project Team in Washington, DC November 2004; (iii) and a field visit to Kazakhstan in December 2004, which included meetings with KPO staff in Aksai, and field consultations and participant observations in Berezovka, with Complainants, and in four other villages around the KOGCF: Bestau, Dimitrovo, Priuralnii, and Karachaganak. 35

Desk Review



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