Posts Tagged ‘Oil’

Apr08

Navajo Residents Question Oil Drilling

Flaring fracking rigs stand out in what was once a sweeping landscape on the Navajo Nation. Photo by Laura Paskus.

Flaring fracking rigs stand out in what was once a sweeping landscape on the Navajo Nation. Photo by Laura Paskus.

Residents of the Navajo Nation are questioning whether federal and tribal officials are adequately regulating oil drilling in the San Juan Basin. Their grievances are both environmental and economic; despite vast amounts of energy produced on the reservation, about 15,000 homes remain without electricity. There are also concerns about hundreds of new wells being drilled along the reservation’s eastern border, where the tribe has no jurisdiction. If the industry does not improve community engagement in the San Juan Basin, it risks amplifying tribal participation in broader efforts to thwart oil drilling in the region. Companies active on or near the reservation include ConocoPhillips, Energen, ExxonMobil, Kinder Morgan, and WPX.

Sources: Indian Country Today, Indian Country Today

This post is excerpted from First Peoples Worldwide’s Corporate Monitor, a monthly report on key trends affecting companies interacting with Indigenous Peoples. To sign up for monthly e-mail updates, click here.

Apr06

Thousands Evicted for Clean Energy and Tourism

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Thousands of Maasai pastoralists in Kenya and Tanzania are being forced off their lands at gunpoint by their respective governments. In Kenya, the evictions are intended to make way for geothermal energy projects, while in Tanzania, they are associated with Ortello Business Corporation, a luxury hunting company based in the United Arab Emirates with close ties to the ruling family of Dubai. Most conversations about Indigenous Peoples and corporations revolve around the oil, gas, and mining sectors, but it’s important not to neglect other industries (in this case, “clean” energy and tourism) that can be responsible for abysmal violations of Indigenous Peoples’ rights.

Sources: Cultural Survival, Ecologist

This post is excerpted from First Peoples Worldwide’s Corporate Monitor, a monthly report on key trends affecting companies interacting with Indigenous Peoples. To sign up for monthly e-mail updates, click here.

Mar30

The Cost of Ignoring Cleanup

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Occidental Petroleum and five Achuar communities in Peru have reached an out-of-court settlement in which the company agreed to compensate the communities for three decades of alleged oil contamination. The amount of the settlement is undisclosed, but both parties are reportedly satisfied. The settlement relates to Occidental’s operations in Block 1-AB from 1971 until 2000, when the concession was sold to Pluspetrol. Pluspetrol has since experienced its own tumultuous disputes with the Achuar, which escalated significantly in the past two months.

Indigenous resistance to resource extraction is often rooted in longstanding grievances with business practices that predate the emergence of corporate social responsibility. Rectifying these grievances, however old they may be, will often be a prerequisite for companies and communities to move forward with constructive relationships.

Sources: Reuters

This post is excerpted from First Peoples Worldwide’s Corporate Monitor, a monthly report on key trends affecting companies interacting with Indigenous Peoples. To sign up for monthly e-mail updates, click here.

Mar16

Defining Impact Areas

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For several weeks, hundreds of Achuar and Kichwa protesters have occupied Pluspetrol’s oil facilities in Peru to demand compensation for the company’s use of their land. Production has been suspended at fourteen wells. With oil prices at an all-time low, the costs of these delays will be especially debilitating.

The protests were triggered by the fact that Pluspetrol pays compensation to some communities in the area, but excludes others. The company says the protesters are from communities outside its impact area, and are ineligible for compensation. Impact areas are frequently defined too narrowly by companies, as Indigenous Peoples often have different conceptions of territorial boundaries, inhabiting and using large swaths of land rather than a defined space. This is why the identification of a company’s impact area requires transparent and inclusive consultation with communities.

Sources: Fox News, Telesur

This post is excerpted from First Peoples Worldwide’s Corporate Monitor, a monthly report on key trends affecting companies interacting with Indigenous Peoples. To sign up for monthly e-mail updates, click here.

Feb11

BG Group Faces Community Risk in Honduras

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Indigenous opposition is surfacing to the BG Group’s offshore exploration permits in Honduras. Miskitu and Garifuna leaders are worried about potential damages to subsistence farming and fishing, and have reportedly denounced the company’s consultation process as “socialization of the contract after the fact.” Additional risks stem from the company’s liaison with the Honduran military, which was recently implicated in a “slew of abuses and human rights violations” in Miskitu territories.

The BG Group claims to have consulted communities in accordance with ILO Convention 169, and promoted awareness of the Voluntary Principles on Security and Human Rights with both private and Honduran security forces. But given the budding presence of community opposition and history of violence in the area, the company would be better positioned if it went a step further and sought Free, Prior, and Informed Consent. Honduras is a risky oil investment as it is, as there has never been any significant production in the country, and effective social risk management may make or break the company’s success.

Source: Upside Down World

This post is excerpted from First Peoples Worldwide’s Corporate Monitor, a monthly report on key trends affecting companies interacting with Indigenous Peoples. To sign up for monthly e-mail updates, click here.

Oct22

The Cost of Ignoring Cleanup

Nigerian communities are reportedly angered by speculations that Royal Dutch Shell is canceling construction of the Trans Niger Pipeline (TNP), which would carry 180,000 barrels of oil per day to the Nigerian coast. The TNP would replace an older, ruptured pipeline that has caused repeated environmental damage. It would be routed to avoid areas where sabotage and theft have been common, equipped with monitoring systems to detect intrusions and leaks, and designed to enable quick access to all its sections. The communities believe the TNP would have environmental benefits and create jobs for local contractors and youths, and do not want the project cancelled.

Constructing the TNP with support from communities could be an opportunity for Shell to improve its legacy in the Niger Delta. On the other hand, cancelling the project could reignite local hostilities against the company. Shell should consider these factors before making a final decision about the project.

Sources: This Day Live

This post is excerpted from First Peoples Worldwide’s Corporate Monitor, a monthly report on key trends affecting companies interacting with Indigenous Peoples. To sign up for monthly e-mail updates, click here.

Jul14

Chinese Presence in Ecuador Affects Indigenous Peoples

Since 2009, China has loaned $9 billion to Ecuador, and has promised to loan an additional $7 billion to the country. These loans amount to nearly one-fifth of Ecuador’s GDP, and their conditions and stipulations give China access to approximately 90 percent of the country’s oil reserves, most of which are on Indigenous territories. Despite China’s recent adoption of Green Credit Guidelines and Foreign Investment Regulations, the country has a sustained record of resource extraction with little to no regard for the environment or human rights. For this reason, Chinese investments in Ecuador are expected to have negative implications for Indigenous Peoples, including communities living in voluntary isolation. Despite China’s rapidly growing demand for energy, approximately 70 percent of the oil it produces in Ecuador is sent to the US via private shipping and trading firms. Because the actions of state-owned and/or private companies are generally more difficult to monitor and regulate, stronger public awareness and transparency protocols are needed to enable US consumers and investors to “trace” oil derived from Chinese investments in Ecuador, and take the actions necessary to ensure that operators respect the principles of Free, Prior, and Informed Consent.
Sources: Amazon Watch

Jun09

Bakken Business Diverted from Tribes

The Bakken oil boom has brought an abundance of cash and business opportunities to the Fort Berthold Indian Reservation in North Dakota, yet many Native-owned businesses are on the verge of closing because they cannot compete with other, newer businesses. Many of these newer businesses appear to be owned by tribal members, but are actually fronts for non-Native companies. Fort Berthold’s Tribal Employment Rights Office (TERO) requires preference for Native-owned businesses for work on tribal lands, with first bids going to businesses that are 100 percent Native-owned. Community members allege that TERO is not enforcing the latter, and that contracts are going to “Native-owned” businesses created solely to provide “the umbrella of Native certification” to non-Native companies wanting to work on the reservation. Because these businesses do not have assets or debt, they can easily outbid businesses that are legitimately Native-owned.

When contracting with Native-owned businesses, companies should conduct additional due diligence to ensure that the work is truly going to community members. Community support for the industry is likely to weaken if the most widely-acknowledged benefits of the Bakken oil boom – jobs and business opportunities – are not realized by residents of Fort Berthold.

Sources: Rapid City Journal

Aug15

The Missing Risk: How Indigenous Peoples Can Make or Break Your Portfolio

Ecuador Indigenous

Let’s face it, Indigenous Peoples are all but irrelevant in most people’s lives. The biggest news on Indigenous Peoples lately is whether or not the Washington Redskins will change their name. Roger Goodell, NFL Commissioner, and Redskins owner Dan Snyder are trying to spin “Redskins” as a “unifying force that stands for strength, courage, pride and respect.” Why? Because Forbes calculates the value of the Redskins brand to be $131 million. Changing the name of one of sports’ most valuable brands would cost millions. Who would have thought that Native Americans could have such an impact on a company’s bottom line?

In fact, Indigenous Peoples across the world are one of the fastest growing risk factors impacting corporate profits, especially those in extractive industries. As oil, gas and mining companies explore the globe for new production sites, they are finding those resources on or near Indigenous Peoples’ land. In the past, that didn’t matter much. For the right price, governments cleared the people away, rented or sold the land, and companies profited handsomely. But now, it’s not that easy.

The investment risk associated with not respecting Indigenous Peoples’ rights is real and growing. The oil industry is holding its collective breath over Chevron’s $18 billion case in Ecuador. Indigenous Peoples sued Texaco, which was bought by Chevron in 2001, for faulty drilling practices that damaged wide areas of the Amazon in the 1970s and 1980s. In February 2008 the Ecuadorian court found Chevron guilty and fined the company $8 billion, which was increased to $18 Billion after Chevron’s refusal to pay. This ruling was upheld in 2012 and the Ecuadorian court froze $200 million worth of Chevron’s assets for continued refusal to compensate Indigenous communities.

Some of Chevron’s shareholders are not happy and responded with a letter questioning, “whether the company’s leadership can properly manage the array of environmental and human rights challenges and risks that it faces.” A week later, 38 percent of Chevron’s shareholders voted in favor of a resolution reprimanding CEO John Watson for his handling of the Ecuador situation, and some have gone so far as to ask the Securities and Exchange Commission (SEC) to investigate the company for misleading investors.

Chevron is not an isolated case. In 2012, Talisman Energy became the fifth oil company to withdraw operations from Block 64 in the Peruvian Amazon because of resistance from the Achuar and other Indigenous Peoples. Now Peru’s state oil company Petroperu is trying its luck, but they are facing continued Indigenous protests. “We have opposed all the companies here, beginning with Arco, then Occidental and most recently Talisman,” wrote one Achuar organization in a letter to Peruvian president Ollanta Humala. “Like we did for all of those, we will make it impossible for Petroperu to enter.”

The costs are not limited to court fines and abandoned projects. John Ruggie of Harvard University and the U.N.’s Special Representative for Business and Human Rights found that delays were a major cost for companies, calculating that it costs a company $20-30 million when a community protest shuts down a world-class mining operation for a week. And delays are increasing in the industry. In 2008, a Goldman Sachs study found that the time it takes an oil project to come online has doubled over the last decade. The reason?73 percent of the delays came from “above ground” or non-technical risks. Translation: unhappy communities are quickly driving up project costs.

The reality is Indigenous Peoples are not going away and extractive companies are going to encounter them more and more. An upcoming report by First Peoples Worldwide that reviews the operations of 40 U.S. oil and gas companies from the Russell 1000 found that over 30 percent of these companies’ current worldwide production takes place on or near Indigenous Peoples land. That figure jumps to over 50 percent when considering future reserves. The numbers are even higher for mining companies, rising to over 40 percent for current projects and near 80 percent for future projects.

How did Indigenous Peoples go from invisible to a major risk factor? Over the last few decades Indigenous Peoples have learned how to use international and domestic legal systems to their advantage. For decades they fought for official recognition at the United Nations and for the right to have Free, Prior and Informed Consent (FPIC) over actions and development projects undertaken on their land. In 2007 they received it in the Declaration of the Rights of Indigenous Peoples (UNDRIP). Knowing they needed more teeth than international law could provide, Indigenous Peoples then fought with increasing success to get UN member states to pass UNDRIP-inspired laws at home.

But Indigenous Peoples also realized profit and loss statements can be more powerful than international law in achieving their goals. They began working with shareholders to pressure corporate boards to consider the costs of ignoring Indigenous Peoples’ rights. In 2007, they successfully worked with the shareholders of Newmont Mining, who voted overwhelmingly (91.6 percent) to direct the company to assess the ways it could strengthen its policies and practices to resolve and avoid community opposition to its projects.

The result? Extractive companies worldwide are racing to define their policies for working with Indigenous Peoples, and Indigenous Peoples are familiarizing themselves with how to use FPIC to their advantage. The losses Dan Snyder and the Redskins face pales in comparison with what extractive companies will experience if they ignore the rights of Indigenous Peoples.

But there is a better way. Just as Snyder could embrace change and work with Native Americans to find a new name that respects Native Americans and preserves the brand equity of his franchise, companies can work with Indigenous Peoples to forge win-win relationships where both shareholders and Indigenous communities achieve their short and long-term goals.

(Photo: Fox News Latino at http://bit.ly/16Ii9Ea)

Jun22

Compensation To Indigenous Peoples In Uganda Hurts As Much As It Helps

Compensation given to individuals affected by the oil activities of Tullow (LSE:TLW) is causing issues in rural communities of western Uganda.  Recipients admit that the compensation, intended to reimburse them for crops destroyed by the construction of roads, is more money than they have ever possessed at once.  However, it does not sufficiently make up for years of income loss that will accrue from the loss of their crops.  The compensation is also fueling gender-related conflicts – although women are primarily responsible for farming, their husbands are insisting the money is theirs and spending it frivolously.  Community members never consented to the roads in the first place, and had no role in determining the amount of compensation they received.

Compensation schemes cannot be developed without participation of the intended recipients, and must be appropriate to their social and economic structures.  Gender roles must also be taken into consideration.  In some situations, giving lump sums of cash to compensate individuals who make their living off subsistence activities can severely disrupt their livelihoods and the social cohesion of their communities.

Sources: Oil in Uganda