Kazakhstan: Lukoil Overseas-01/Berezovka
$50 mill (A), $75 mill (B) & $25 mill (C) loans
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’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.
CAO Compliance released the appraisal report in April 2007 determining that the issue related to emissions to air merited further investigation in the form of an audit of IFC. Other issues related to water quality and relocation did not fulfill CAO's audit criteria. In the audit report, which was completed in April 2008, the CAO found IFC to be out of compliance on how IFC had assured itself that emissions to air from the project complied with IFC requirements. CAO continued to monitor actions by IFC to ensure that IFC would meet 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 engaged with the project sponsor to verify compliance.
Following a site visit by the audit team in January 2009, the CAO released a monitoring report that listed outstanding issues related to the project’s performance: reporting of stack emissions; completeness of ambient air quality monitoring programs; and adequacy of the selection of ambient air quality monitoring sites. The project sponsor committed to an action plan to resolve these outstanding issues and, by April 2009, the CAO received confirmation that the action plan had been adhered to.
Issues related to IFC's assurance process remained unaddressed. Since the noncompliances related to project performance had been addressed by the project sponsor and IFC's client had ended its contractual relationship, the CAO closed the audit.
CAO closed the case in April 2009.