JOINT LETTER FROM INTERNATIONAL ORGANIZATIONS REGARDING THE OCP HEAVY CRUDE PIPELINE IN ECUADOR

TO:
Dr. Friedel Neuber , Chairman Westdeutsche LandesBank
P.O. Box 40199 Dusseldorf
Herzogstrasse 15
40217 Dusseldorf, Germany
Fax: 0049-211/826-6121 or 2588 Mr. Rod Fraser
WestLB - New York & Cayman Island Branch International Banking Facility
1211 Avenue of the Americas, 23rd & 24th Floor
New York, NY 10036 Fax: (212) 852-6300

CC: Prime Minister of Federal State NRW, Wolfgang Clement
Fax: 49-211 837-1562

Dear Sirs:

We, the undersigned international environmental and human rights organizations, are writing to urge you to take immediate steps in preventing a tragedy in the making-one that your company has the power to avert. Currently, the government of Ecuador and a consortium of multinational oil companies are moving ahead with a controversial new oil pipeline project known as the OCP (Oleoducto de Crudos Pesados). It is our understanding that Westdeutsche LandesBank, the largest publicly owned bank in Germany, is providing financing to the OCP Ltd. Consortium through a $900 million, 17-year loan agreement reached on June 10, 2001. We urge you to suspend the disbursement of this loan.

Your immediate action on this issue is necessary given that the Ecuadorian government and the Consortium are proceeding with construction of this pipeline and disregarding legitimate public concern about the environmental, social, and health impacts of the project. This project is moving ahead in violation of the Ecuadorian Constitution, which requires proper prior consultation with affected communities.

In the last several months, the controversy surrounding the OCP has generated extensive negative publicity in the national and international media. Concerns over the direct impact of the project on the environment, health and livelihood of local populations have ignited street protests, occupations of government offices, legal actions, and blockades of construction machinery. Affected communities have vowed to escalate their demonstrations and seek legal remedies to delay and cancel the project.

To date, the Ecuadorian Government's response to growing public protest has been to threaten those the government considers as leaders of the opposition to the project.

The OCP Ltd. Consortium and the Ecuadorian government have failed to evaluate or disclose the long-term adverse impacts of sprawling oil exploration on pristine areas, public health, and water resources of the Amazon region. To date, there has been little assessment of the reality that the heavy crude deposits needed to fill the pipeline over its 20-year life lie beneath internationally recognized eco-tourism destinations, national parks, wildlife reserves, and indigenous territories. Failure on the part of the project sponsor to resolve such outstanding issues will only lead to escalating public protests and legal challenges.

Ecuador is experiencing the highest rate of deforestation in the Amazon Basin. Is your institution willing to ensure that the same environmental and social devastation that the past 30 years of oil development has inflicted on the Ecuadorian Amazon will not be repeated over the next twenty years?

Our organizations are concerned about three key issues.


1) The Northern Route: Mindo Nambillo Cloud Forest - The pipeline route chosen by the consortium cuts through 11 protected areas including the Mindo Nambillo Cloud Forest Reserve and the surrounding ecologically significant forests. This area is home to more than 450 species of birds – - 46 of which are threatened by extinction – -and has been designated the first "Important Bird Area" of South America by BirdLife International. The pipeline also represents a threat to the burgeoning eco-tourism industry, which could bring in upwards of $600 million over the next 20 years. Prominent Ecuadorian and international scientists, environmentalists, the eco-tourism industry, and local communities have repeatedly voiced their strong opposition to the northern route.

2) Adverse impacts on protected areas in the Amazon from the doubling of oil production - The Ecuadorian government and the OCP Ltd Consortium have not considered or disclosed the medium and long-term impacts of the new pipeline on ecologically and culturally sensitive areas in the Amazon region. In order to reach the production target of 390,000 to 450,000 barrels per day, hundreds of new oil wells and flow lines would be needed, some of which will be sited in sensitive areas. For example, major new oil wells are planned in blocks 31 (Perez Companc) and 15 (Oxy & Alberta Energy) located inside fragile protected areas including the Yasuni National Park, Cuyabeno Wildlife Reserve, and the Limoncocha and Pañacocha Biological Reserves. In addition, in order to transport the crude over the Andes, processing and refining facilities are planned near population centers and protected areas to heat the 450,000 barrels of crude per day to 80 degrees Fahrenheit using diesel fuel. The public health and environmental impacts of these activities have not yet been assessed or publicly disclosed. The project sponsors have ignored local opposition including strong protests from local authorities.

3) Boom in oil exploration in Ecuador's frontier forests - According to reliable sources within Petroecuador, known heavy crude reserves are expected to run out within 10 years after the OCP pipeline begins operation. Thus, this project would fuel the search for additional oil reserves covering 2.4 million hectares of Ecuador's last remaining frontier forests and the ancestral territories of isolated indigenous peoples. This environmentally and culturally sensitive southern region falls entirely on the territories of Achuar, Shuar, Huaorani, Quichua, Shiwiar, and Zapara indigenous communities - many of whom have vowed never to permit oil development. Furthermore, the prevailing position of national and international organizations is that a moratorium be declared on all new oil exploration in the Ecuadorian Amazon.

Communities along the pipeline route and in the Amazon are concerned that the process of public consultation has been fundamentally flawed. The Ecuadorian Constitution requires prior consultation with affected communities. In this case, consultation is taking place after the route has already been defined in the OCP contract, attempting to justify a decision already made. Other groups are also calling for an independent international review to be carried out which properly evaluates the yet un-addressed long-term impacts.

The signatories of this letter recognize that Ecuador's oil exports are primarily destined for consumption in the United States, particularly in California, and are committed to informing the North American public of the true costs of oil imported from Ecuador. Not only does this pipeline threaten fragile areas, it further increases our reliance on oil - the main fossil fuel responsible for climate change. Instead of financing expansion of the oil industry into fragile areas, we encourage Westdeutsche Landesbank to invest in the development of clean renewable energy alternatives. This is the only truly economically and environmentally sustainable way forward for satisfying our countries' energy needs and for safeguarding against the perils of climate change.

Reflecting growing public and investor concern over the financing of environmentally and socially destructive projects, corporations, banks, institutional investors and investment funds have begun implementing investment screens and guidelines. The OCP pipeline is exemplary of the type of ecologically unsound project that would be excluded in most environmental and social investment screens.

Recognizing that there is a growing movement in Ecuador for the cancellation of the OCP contract, we urge you to weigh in on demands put forward by Ecuadorian and international groups such as:


1) An independent international review of the pipeline's environmental impact assessment and environmental management plan; and

2) The evaluation and disclosure of the pipeline's associated impacts on the aforementioned protected areas in the Ecuadorian Amazon – in particular from the doubling of oil production, and the construction and operation of flow lines, refineries and processing plants.

3) Ensuring that the pipeline will not lead to irreversible harm to protected and fragile areas.

We further ask that until the above issues are resolved, that your bank:

1) Suspend the $900 million loan to the OCP ltd. consortium; and

2) Adopt a policy to exclude all oil exploration and production activities in ecologically and culturally sensitive regions; in particular, refrain from new oil investments in the Amazon rainforest.

We and the future generations who will inherit this earth appreciate your leadership and foresight in ensuring that your banks' lending does not lead to the irreversible destruction of the Amazon, one of the Earth's most prized cultural and ecological treasures. We would appreciate a response to the questions and demands presented in this letter and request information about your corporations' social and environmental policies.

Respectfully,

Reinhard Behrend, Rettet den Regenwald e. V. (Hamburg, Germany)

Horst Bertram, Vorsitzender, Botanischer Verein Zu Hamburg E.V.
Verein Fur Pflanzenkunde, Naturschutz und Landschaftsplege (Hamburg, Germany)

Dr.Thomas Henningsen, Forest Campaign, Greenpeace (Germany)

Bernhard Henselmann, EarthLink - The People & Nature Network (Germany)

Roland Wirth, Chairman - Zoologische Gesellschaft für Arten- und Populationschutz e. V (Germany)

Klemens Laschefski, BUND - Bund für Umwelt und Naturschutz e. V.
Friends of the Earth / Amigos da Terra - Alemanha (Germany)

Hermann Edelmann, Pro-Regenwald, (Germany)

Dr. Rainer Putz, Regenwald-Institut e.V., Institut für angewandten Regenwaldschutz (Germany)

Tom Griffiths, Forest Peoples Programme, (United Kingdom)

John Seed, Director, Rainforest Information Center (Australia)

Atossa Soltani, Executive Director - Amazon Watch (US)

Danny Kennedy, Campaign Coordinator, Clean Energy Now California, Greenpeace (US)

Randall Hayes, President, Rainforest Action Network (US)

Joshua Karliner, CorpWatch, USA

Carwil James, Oil Campaign Coordinator, Project Underground (US)

Russ Shade, Executive Director, Pionus Parrots Research Foundation, Inc. (USA / Ecuador)

Paul Horseman, Climate Campaign, Greenpeace International

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