Caspian Developments Advisory Panel BP Response to the Interim Report on Azerbaijan and Georgia

Transcription

1 Caspian Developments Advisory Panel BP Response to the Interim Report on Azerbaijan and Georgia BP welcomes the interim report from the Caspian Developments Advisory Panel ( the Panel ), and thanks its members both for their diligent and considered approach and for their recommendations, suggestions and views. We share their vision that the Caspian projects have the opportunity to create a model for investments in extractive industries that will leave a lasting positive legacy in the host countries [94 1 ] and believe that the work of the Panel is a valuable addition to the unprecedented and continuing - level of consultation, public scrutiny and engagement which has characterised these projects to date. The Panel notes that BP and virtually all of its partners are private-sector actors, and that many of the benefits expected to flow from development of Caspian oil and gas can only be secured through sovereign action by the governments of host countries. [4] While BP shares the Panel s view that it has an opportunity and obligation to contribute positively to development in that region, we also recognise the boundaries that exist to limit our potential contribution: although we are a significant actor in the region, we cannot and should not attempt to emulate the role of government. The projects themselves are not inherently development projects, the resultant revenues and gas supply received by the host governments do have the potential to catalyse economic development. BP recognises that there are additional actions that are and should be undertaken to address some of the broader socioeconomic development issues. These issues are considered more fully in the Regional Review, an economic, social and environmental overview of the Southern Caspian oil and gas projects, published in February 2003 and available on [ We are particularly pleased that the Panel has recognised the steps that BP has already taken in ensuring that people in Azerbaijan and Georgia enjoy real benefits from these investments. 1 Numbers in square brackets refer to page numbers in the Interim Report 1

2 We have consistently recognised the need to involve not only partners and host governments, but also international financial institutions, contractors, national and international NGOs and the wider international community in ensuring that tangible broad-benefits are delivered to the host countries. It is important to recognise that many of the conclusions and recommendations arising in the Report relate to and in some cases would require action, commercial negotiation and formal agreement with members of this wider community. In particular, although the Report was commissioned by and for BP, we are delivering the Azeri-Chirag-Gunashli (ACG), Shah Deniz (SD), Baku-Tbilisi-Ceyhan pipeline (BTC) and South Caucasus pipeline (SCP) projects as the operator on behalf of their respective partnerships. Many of the recommendations can only be undertaken with the agreement of the partnerships that we represent/lead. As a priority, we will endeavour to share both the report and our response with them and encourage the Panel to continue to communicate directly with as wide a group as possible. We have noted the areas where the Panel believes we have fallen short of our aims and where appropriate will ensure lessons learned in this region are shared with colleagues and the wider industry. The Panel has concentrated on the governing legal regime; economic impact; environmental impact; social impact; and sustainable investment. As well as a detailed commentary, the Panel makes over 60 clear recommendations and suggestions, but highlights six priorities. We will similarly prioritise our responses. Where appropriate we have grouped recommendations to avoid unnecessary duplication. Many of the recommendations have far-reaching consequences, and a merit a fuller response than is possible in this paper; it has been noted where this is the case. 2

3 Detailed response to the recommendations 1. Sustainable development The Panel offers several recommendations to promote sustainable development in the region and ensure that the benefits of the projects are shared widely - especially among those living along the pipeline route. The Panel recommends the creation of a Caspian Development Fund [5, and chapter VII, B], which would combine the projects community, social and investment funds and recommends the intensive involvement of other private sector entities and public development agencies. The Panel has suggested in some detail the potential attributes that this initiative should have; how it could be structured; and potential funding mechanisms. Elsewhere, the Panel urges BP to focus on development of small and medium enterprises (SMEs), including related reform in the banking sector [7 and chapter IV, B]. We believe these two broad areas are inter-related and therefore our response covers both. We agree that it is essential that the projects bring wide benefits to the host countries. From the outset, BP and its project partners have made a broad effort to understand the countries specific needs and to develop ways of addressing them. As the Panel notes, the Community and Environmental Investment Programmes are an initial element of this response and we are pleased that our efforts to date have been recognised. We acknowledge that the programmes currently underway are designed for the construction period only, and agree that a further initiative is required to cover the operations phase. We welcome the Panel s broad recommendations in principle and, as they propose, are continuing to work to develop a model for large-scale, extractive industry investments in developing countries through the creation of a broader sustainable socio-economic development initiative. In this respect, BP is already involved in intensive discussions and planning with a number of agencies and institutions, particularly, the EBRD. We are however, acutely aware that there is no simple solution. We are considering some of the more detailed recommendations made by the Panel, but recognise the challenges faced by other similar structures elsewhere. In particular we will carefully consider the appropriate funding levels and sources of 3

4 funding, but we do not believe that funding on a per unit basis is the most effective way of establishing the initiative by the end of We do, however, very much look forward to working with the Panel as this work evolves, and in particular we seek their input addressing the challenge of ensuring appropriate focus. 2. Strengthening support to SMEs We agree with the Panel that support for small and medium-sized enterprises (SMEs) is critical for the development of the economies in the host countries [7]. We have considered this issue in some detail in the Regional Review [Chapter four]. There are clearly two elements to this: the part that we can impact directly, through the projects own demand pull ; and the role we could play in promoting the development of the non-oil economy. We have already delivered tangible results. For example, we have increased the amount of business we do with local SMEs in Azerbaijan by almost three-fold between 2001 and 2003, such that this year it will amount to some $30 million. In this light, we are particularly proud of the work undertaken by the Enterprise Centre in Baku in supporting the development of small and medium-sized enterprises in Azerbaijan and we are pleased that this effort has been recognised by the Panel. The Panel makes a number of recommendations encouraging us to expand its role. While the Enterprise Centre has been open for just over one year, we are already reviewing ways to strengthen its role. We may also consider its potential as an investment vehicle in partnership with others. The Panel recommends that BP takes steps to strengthen SMEs, including: o Working with development organisations to provide technical assistance and other programmes that target banking functions o Explore opportunities to fund/support credit facilities that could be established by regional development organisations o Increase efforts to use non-technical SMEs o Identify procurement opportunities for SMEs outside the energy sector [7] We accept these recommendations, elements of which will be included in the socioeconomic development initiative described above. 4

5 3. Georgia Access to Energy We recognise the very real challenges that Georgia and to a lesser extent Azerbaijan face in supplying energy reliably to their citizens. We note the Panel s comments highlighting the dichotomy of the transit of billions of barrels of oil and gas reserves [which] leave a significant share of the families along and beyond the pipeline corridor without heat in the winter and reliable electricity throughout the year [48]. We have considered this issue in some detail in the Regional Review [Chapter six, pp ]. We will continue to work at a local level through our Community Investment Programmes to implement measures leading to local improvements in access to energy, and at a national level in providing technical assistance to the government of Georgia to support stabilisation and development of the country s energy sector. We recognise that institutional and policy changes are essential to remedy the situation. The Panel s request for our continued input on the initiatives [50] reflects a widely understood view that real change in the Georgian domestic energy can only be initiated by the combined, co-ordinated efforts of all stakeholders, not least by the Georgians themselves. We agree. 4. Improving transparency and the free exchange of ideas We agree with the Panel that BP can have an important positive impact on improving transparency and expanding the free exchange of ideas in the countries in which it has invested [8]. Indeed the company was one of the founding signatories to the Extractive Industries Transparency Initiative (EITI), announced by UK Prime Minister Tony Blair in Johannesburg in September We are greatly encouraged by the way in which Azerbaijan has approached the EITI and their desire to be fully involved in the process. We will endeavour to provide all requested information and support to enable Azerbaijan to participate fully in the EITI in respect of BP-operated activities The Panel recommends that BP prepares and makes publicly available, in English and local languages, a detailed and easily understood annual statement of specific payments that are made to host governments and their agencies and the overall 5

6 estimated earnings.that the Projects [will] generate [8]. We intend to publish an annual report providing information on payments to governments, projections of future earnings and our social and environmental performance, subject to host government and partner agreement, which we believe should fulfil the Panel s recommendation. Additionally, BP and our partners have already published the production sharing agreements, inter-governmental and host government agreements, environmental and social impact assessments and other project documentation. The Regional Review contains a comprehensive forecast of future revenues payable to Azerbaijan, Georgia and Turkey from our activities. We hold quarterly press briefings, in which we publicise cash-flows, in Baku and regular briefings for the media in Georgia and Turkey providing further information on our operations and projects. We agree unequivocally to continue our strong anti-corruption policies and practice. 5. Clarify governing legal regime BP accepts the Panel s characterisation of the governing legal regime (which includes the inter-governmental agreement, host government agreement, BP and partner policies, project agreements) as providing greater certainty for the investment.given the stage of development of various legal institutions in the host countries [10]. We believe that the agreements, taken together, provide a clear framework, incorporating the highest standards, for all concerned. Moreover, by publishing these agreements we have set a new benchmark for transparency in international extractive sector projects. We are aware of and take seriously concerns expressed by Amnesty International and summarised by the Panel [28], and have been, and continue to be, in constructive discussions with a range of human rights groups both before, and since, publication of Amnesty s analysis to clarify issues of concern. The Panel recommends that BP work with the host governments to clarify a number of critical issues in the legal regime, including: o Access to local courts and local administrative remedies o Environmental, health and other standards on project activities 6

7 o How and by whom the environmental, health and safety standards are to be determine [10-11]. We will publish a plain-language summary of the IGA, HGAs and other relevant project agreements, which will amongst other things clarify how these provisions are already covered by the legal framework. We believe that the Joint Statement, signed between BTC and the governments of Azerbaijan, Georgia and Turkey represented a significant step in addressing NGO concerns and we will consider additional clarifications to tackle the issues raised by the Panel. We will take steps to implement a Joint Statement for SCP, which will be similar to that signed between BTC and the governments of Turkey, Georgia and Azerbaijan in May Expansion of Environmental and Social Monitoring BP shares the Panel s commitment to engage with civil society and supports its recommendation that NGOs play a role in monitoring the construction and operation the projects. BP will continue to encourage on-going dialogue between the public and NGOs to help ensure public confidence in the projects is maintained. Extensive external monitoring of the projects is already taking shape. For example, in addition to BP s own Environmental and Social auditing process (reported on the group of potential lenders to the BTC project has begun quarterly monitoring visits. The Panel recommends external monitoring for both social and environmental impacts. Specifically, it recommends the creation of a community monitoring mechanism in relation to the Borjomi region [10]. BTC is currently examining options for how best to involve civil society in monitoring the whole of the pipeline route, not just Borjomi. We intend to implement formal community engagement mechanisms along the route. However, there are many models for such mechanisms; great care must be taken to ensure that such bodies have a meaningful role and one which complements and enhances, rather than duplicates, regulatory, lender, and corporate audit and scrutiny. As part of this process, we are reviewing Alaska s 7

8 citizens advisory councils, as well as other relevant models from elsewhere around the world. BP s goal will be to design an approach that ensures transparency for the public and is appropriate to countries with developing non-governmental sectors. We will continue to work with the Panel on developing and implementing a suitable mechanism. We agree that ongoing monitoring of the social impacts of the projects, as well as the establishment of clear grievance procedures are important parts of the Resettlement Action Plan, and we are pleased that the Panel has recognised the steps we have already taken to establish certain monitoring processes and grievance procedures. The Panel makes a specific recommendation to establish a RAP external monitoring panel [11]. This is now in place and is currently undertaking its first review of activity. 7. Environmental Issues: The Panel makes a number of recommendations on a variety of environmental issues, including issues specific to the Borjomi region; Caspian Sea; the publication of environmental data; the disposal of drill cuttings; decommissioning; and cultural heritage management. We very much appreciate the effort that the Panel has made to understand how pipeline routing decisions in Georgia were taken and communicated - especially those relating to the routing through the Borjomi region. The Panel s characterisation of this process is both clear and helpful and we have noted the points they raise. We agree with the Panel that continuing consultation and cooperation by BP with the Ministry of the Environment and Natural Resources is important for the successful execution of the project [69]. We are particularly pleased, therefore, that the Panel has reported comments from the Minister of the Environment, stating that cooperation has recently improved. We will endeavour to ensure we continue to build on this relationship. The Panel also recommends that BP involve local government and citizens in its oil spill response plan and develop a program to train and equip the local community in Borjomi to respond to a potential oil spill [72]. The oil spill response plan for the 8

9 entirety of the pipeline route is under development and it envisages establishing a dedicated team, of properly trained and equipped local personnel, in Borjomi. BP has made a firm commitment to proper and thorough involvement of local authorities and communities in the development of the plan. We would also draw attention to the emphasis we have placed on preventing oil spills on the BTC pipeline through the engineering techniques, materials used, and the security measures that will be undertaken. Efforts have been and will continue to be expended to communicate these preventative measures to communities along the pipeline route. The Panel has also recommended that if BP has not already done so that BP promptly complies to complete the ongoing activities required in accordance with the agreed timetable [accompanying approval of the BTC ESIA], including submission of the required reports in Georgian [70]. We are happy to confirm that we have an agreed schedule with the Ministry of the Environment and are in compliance with that schedule. Caspian Sea We welcome the emphasis that the Panel has given to the environmental issues associated with the Caspian Sea. The Panel notes that While BP cannot and should not be held responsible for the environmental degradation associated with earlier environmental mismanagement, it must, at a minimum, ensure that its project activities minimize the negative impact on the environment [57]. We agree without reservation that we must ensure that the negative impacts of our project activities are minimized. The Panel recommends that BP, in its role as the major foreign investor in Azerbaijan, continue to take steps to help mitigate further environmental degradation in Azerbaijan and in the Caspian Sea [57]. As the Panel notes, BP cannot and should not be held responsible for the environmental degradation associated with earlier environmental mismanagement. For example, a significant threat to the Caspian system may arise from ecological disturbances due to the introduction of alien species. However, BP will continue to contribute to efforts to mitigate further environmental degradation and will continue to work with others to 9

10 minimize potential negative environmental impacts arising from developments in the Caspian. With regard to the recommendations on oil spills we are working, where possible to address the Panel s concerns. The Panel recommends that BP and its Partners in AIOC explore whether there are practical options to reduce the time it would take to halt the release of oil due to a blow-out [60]. We are committed to ensuring that wells are designed, drilled, completed and maintained to high and consistent standards. Our approach to managing well control is focused on prevention through proper well design, operational procedures and integrity of well control equipment. Contingency plans are in place for a rapid response in the event a blowout occurred. BP, along with one of its partners, Exxon Mobil, is already playing an active role in supporting the government of Azerbaijan with regard to spill response in the Caspian. For example, it has been supporting the testing and approving of dispersants, including the provision of lab equipment to the MENR. A programme of toxicity and efficiency testing of six dispersants is nearing completion. The results will be submitted to an expert group convened by BP, Exxon Mobil and the MENR for final evaluation and selection, subject to partner and government agreement. The issue of trans-boundary co-operation on oil spills is complex and challenging, but where possible, recognizing the limitations of our role as a private actor, we will do what we can to support any such co-operation. We also acknowledge the Panel s concerns over the transportation of non-acg oil through BTC. If a decision is made to transport non-acg oil through BTC, the Panel recommends that BP [and AIOC] supplement the existing ESIAs with a risk assessment and proposed mitigation measures associated with transport of crude oil across the Caspian [61]. There are limits to our geographical influence in terms oil developments within the Caspian Region. BP can commit to update existing ESIAs with a review of the cumulative impacts section, in the light of any actual plans to transport Kazakh oil into BTC. We cannot however commit to undertake actions in the transportation chain into BTC in which we have no direct involvement. We will, however, work with our partners to seek agreement that such volumes are transported 10

11 in tankers compliant with BP ship vetting standards and will only use such vessels ourselves. Publication of Environmental Data The Panel made several recommendations to publish environmental data [62, 63, 69,71]. In all cases we have already published or have an agreed formal schedule to publish - such data. We will endeavour wherever practical to make raw data available and will look at how this may best be accomplished. Cuttings BP s cuttings disposal strategy for the Caspian is as follows: All water based mud cuttings will be discharged to sea. All non-water based mud cuttings, with the exception of those from the Chirag Platform, will be either reinjected offshore, or where this is not possible, shipped to shore for treatment and disposal. This disposal strategy is in line with European regulation, and goes further than the ACG Production Sharing Agreement, which allows for discharge of synthetic based mud cuttings to sea. Space and weight restrictions on the Chirag Platform currently preclude the capture of synthetic based mud cuttings for shipment to shore or reinjection. However, equipment upgrades have allowed for improvement in separation of fluid from cuttings prior to discharge, and opportunities to further reduce impacts are being sought. It is important to note that the regulatory environment regarding the disposal of cuttings is developing, and not necessarily in the same direction. For example, stronger regulation has taken opposite directions in North America and Europe. The US Environmental Protection Agency has formally rejected the no discharge option for synthetic-based cuttings. The US approach was based on a Best Practicable Environmental Option that concluded that shipping of the cuttings and treatment onshore may have a greater net environmental impact than discharge to sea. OSPAR, the Convention for the Protection of the Marine Environment in the North-East Atlantic, allows for discharge of organic phase drilling fluid only if the concentration is less than one per cent on cuttings, resulting in the majority of organic phase 11

12 contaminated cuttings being shipped to shore. Treatment systems that potentially achieve less than one per cent fluid on cuttings are currently under trial in the North Sea. The ACG ESIA notes that the discharge of drilled cuttings and water-based muds to the sea will result in the smothering of the seabed in the vicinity of the discharge point with resultant physical alteration to the seabed and subsequent biological change to the seabed habitat. It should be noted that no issues of chemical contamination were identified in relation to water based mud cuttings discharge. Research into the physical impacts of such discharges indicates that local ecology can recover quickly. Regular dialogue with local stakeholders is ensuring that BP is aware of concerns raised regarding (any) discharge to the Caspian Sea, and continues to balance these concerns against the conclusions being drawn from Best Practicable Environmental Option (BPEO) studies. The BPEO approach is well established and well-validated. The Panel recommends that BP continue to monitor the environmental impact of the cuttings discharge program and recommends that it consult on BP s findings and assessment, on a regular basis, with officials from the Ministry of Environment in Azerbaijan [59]. The monitoring programme will be sufficient to delineate the physical scale and nature of the impacts versus those predicted, and results of such monitoring will be reported to the Ministry of Ecology and Natural Resources. The Panel recommends that BP continue to frequently revisit the issue of cuttings discharges in light of evolving global best practices and commit to handling of discharges in line with these changing best practices [59]. Whilst BP will continue to examine changes in global best practice (such as shipment of cuttings between platforms for reinjection), no commitment can be made to handle discharges in line with changing practices as this may not always be possible. For example, technical restrictions such as space and weight may preclude introducing further treatment equipment onto a platform. Certainly, as options arise they will be evaluated to see if they can be applied to the Caspian operations. 12

13 The Panel also recommends that BP explore long-term options for permanent disposal of cuttings temporarily stored onshore [59]. BP has been exploring longterm disposal options for cuttings shipped to shore and currently held in temporary storage. This has culminated in a recommendation to purchase an indirect thermal desorption unit for treatment of cuttings, which is due to be operational in Other options continue to be assessed. The results of this work have been subject to BP corporate peer review which has given a favourable response to the direction being taken. Decommissioning Decommissioning and abandonment for the offshore facilities will primarily include the deconstruction and removal of topsides and decommissioning of the jackets. In addition to this will be well plugging and abandonment and pipeline decommissioning and cleaning. The Panel recommends that BP, to the extent it is not already doing so, respect the provision in the 1989 IMO Guidelines that all new offshore structures be designed and constructed so as to make feasible their entire removal upon abandonment. [75] In line with company policy and PSA requirements, the ACG Azeri project adheres to best international petroleum industry standards and practices in developing abandonment plans for its offshore facilities. This includes following guidelines set out in the 1992 OSPAR Convention on the protection of the Marine environment of the North East Atlantic and subsequent OSPAR Commission updates such as the OSPAR Decision 98/3 detailing a new regime for the decommissioning of disused offshore installations, and the 1989 International Maritime Organisation guidelines. UK DTI guidance notes will also be referenced during abandonment plan development. The Panel recommends that BP ensure that its decision-making process with regard to decommissioning is subject to public scrutiny well in advance of the deadline stipulated in the PSA for preparation of an abandonment plan.[75] We agree. The Panel also recommends that, when ownership of the offshore facilities changes hands, BP should do everything possible, including contractually binding the state 13

14 oil and gas companies, to ensure that the ultimate owner properly decommissions the facilities.[76] Decommissioning and abandonment activities will be performed in line with the PSA requirements. The project will endeavour to work with SOCAR so as to provide due diligence and assurance around this process. However it is very important to note that BP cannot impose contractual conditions upon SOCAR. The Panel recommends that BP must make every effort to ensure that decommissioning, when carried out by third parties such as SOCAR, does in fact accord with best international practice. To this end, the Panel recommends that BP and its Partners clarify its commitment to decommission the project facilities, publish an estimate of the ultimate costs and demonstrate that the project partners are contributing sufficient funds well in advance of termination of the facilities use to cover decommissioning costs.[76] The Project recognizes that under the terms of the PSA, SOCAR is ultimately responsible for the abandonment of the facilities, and funds are specifically set aside for this purpose during the life to the PSA. The Panel also recommends that BP should pay close attention to developing international standards regarding the disposal of onshore pipelines BP should make every effort to ensure that the pipelines are eventually decommissioned in line with the best international standards.[77] We recognise the challenges presented by decommissioning, and where possible will continue work with our partners towards the decommissioning of pipelines in line with the appropriate international standards, noting, however, that SOCAR is ultimately responsible for the abandonment of the facilities Cultural Heritage Management The Panel raises concerns with regard to that the Cultural Heritage Management (CHM) Plan in Azerbaijan, finding it lacking in comparison to that which we are undertaking in Georgia, specifically noting that BP should ensure that there is adequate time to plan and implement mitigation measures for unexpected finds. The Panel also recommends that BP ensure that the archaeologists responsible for monitoring day-to-day construction are in regular contact with either the relevant 14

15 government oversight body or a designated advisory body. [91] We acknowledge that the Azerbaijan CHM Plan could benefit from revision. We would like to clarify, however, that the Archeological Chance Finds Procedure has been developed to complement the CHM Plan and ensure a sufficiently comprehensive suite of mitigation measures is in place, and this is entirely aligned to the Procedure developed by BTC in Georgia. The archaeological watching-brief in Azerbaijan is provided by representatives of the Institute of Archaeology, thus ensuring that national interests will be represented should there be a chance find. BTC also maintains regular communication with the Ministry of Culture. In the event of a chance find, sufficient time will be allowed by BTC to investigate the significance of the situation and to develop and agree suitable mitigation measures with the authorities. With regard to the recommendations regarding post construction awareness in the Gobustan region, and the recommendation to work with the Ministry of Culture and Azerbaijani authorities to create an effective plan for protecting the Gobustan petroglyphs closest to access roads built for pipeline construction,[92] BTC will monitor the right of way post construction to determine the effectiveness of reinstatement activities. This will be done with sufficient frequency to assess whether cultural heritage is being harmed by any unplanned access to sensitive sites via the right of way. BTC supports the idea of strategic planning to protect Gobustan's cultural and natural heritage. We have already made a proposal to the Ministry of Culture and the Ministry of Environment and Natural Resources, and hope to receive a positive response in the near future. 8. Social Impact Issues BP appreciates the Panel s acknowledgment that we approached the sensitive issue of land acquisition in a thorough and equitable manner consistent with the company s business policies. Our intention is that at the very least, no one should be economically, socially or otherwise disadvantaged by the construction and operation of the pipeline. This has required an unprecedented effort in terms of public information about the process, identification of land-owners and users, clarification of mapping and ownership and establishment of fair rates of compensation for land and crops. 15

16 The whole process has been described transparently by a Resettlement 2 Action Plan (RAP) prepared to IFC standards, explained to local populations along the route in Guides to Land Acquisition and Compensation (GLACs) and explained in detail to individuals by the efforts of the BTC team and its contracted specialist NGO in each country CLEE in Azerbaijan and APLR in Georgia. The RAP Fund was devised as an innovative means of compensating informal land users who would otherwise not receive compensation under local law. This measure was designed to satisfy the objectives of BP and the International Finance Institutions, as well as international NGO observers, that the project be equitable and transparent with respect to its treatment of affected people. The Panel makes five specific recommendations about the land acquisition and compensation process: 1. Complaints about rapidly-concluded agreements are investigated and difficulties with Cyrillic script are resolved.[85] The number of complaints received has been small but we will investigate complaints fully. Our arrangement with CLEE and APLR should enable any documents to be reviewed and amended if necessary. We are confident that there will be a satisfactory outcome for local residents and the company in these cases where compensation rates are disputed. Where individuals prefer to read Cyrillic script, translated contracts can be provided, however by the Presidential decree of 1993, all official government documents in Azerbaijan must completed in Azeri Latin script. 2. The development of security for individuals once land payments have been made.[86] The panel notes that an unfortunate consequence of the transparency of the land acquisition process is that individuals receiving payments are easily identified and that there have been isolated incidents of extortion. We will continue to work closely with local authorities and NGOs, as recommended, to try to reduce this risk. At present, it appears that this is best achieved by promoting the use of banks, rather than encouraging the carrying of large amounts of cash, but the choice of method of payment has to remain with the individual. 2 It is important to note that no one will have to move physically as a result of the pipelines construction or operation. 16

17 3. To pay compensation for communal lands to affected villagers who may lose grazing rights.[87] We agree. We are currently advised that village councils in Georgia are the most appropriate representative body, but will continue to take advice from NGOs in country. Our Community Liaison Officers will follow this issue and our current policy can be modified in the light of their own, and external, observations. 4. Recommendation to establish post-construction land restitution procedures in Georgia.[88] The RAP Summary of Land Requirements is our published commitment to return the ownership and use of the land affected back to the original owners. Detailed proposals for the necessary amendments to Georgian Law are currently with the Georgian Parliament and when these are approved they will allow restitution of the ownership rights to the original owners, subject to the restrictions necessary to protect pipeline integrity. 5. Recommendation that BP remains engaged in the dispute resolution process and that we promote the existence of Community Liaison teams more actively.[90] We agree. This will be done by BTC s own Community Liaison Officers in each country, who are qualified national staff and are already establishing regular working contact with villages along the route. Conclusion We will continue to work with all those who share our aim that the projects are completed safely and successfully and look forward to the Panel s report on Turkey; its cross-country conclusions; and its continued advice, counsel and challenge. 17