EXECUTIVE SUMMARY This Section Summarises the Third Quarterly Environmental and Social Report on the Baku-Tbilisi-Ceyhan (BTC) Oil Pipeline
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EXECUTIVE SUMMARY This section summarises the third quarterly Environmental and Social Report on the Baku-Tbilisi-Ceyhan (BTC) oil pipeline. The report is a requirement under the conditions agreed with the financial Lenders to the project. It covers developments during the months of July, August and September, 2004. A key objective of the quarterly report is to meet the reporting requirements outlined in the Environmental and Social Action Plan (ESAP). In addition the report provides an opportunity for the project to publish environmental and social information on a regular basis, including all the positive aspects of the project, and make it available to a wide range of stakeholders. In this respect the report compliments internal and external independent reviews and audits that, by their nature, focus on areas where the project can improve its performance. It is hoped that issuing this report as well as publishing project bulletins and external audit and monitoring reports on our website www.caspiandevelopmentandexport.com, will provide transparency and create an environment where dialogue is possible with all our stakeholders including those who have provided project financing. The third quarter (Q3) Report adopts the same structure and uses the same approach as the second quarter Report. Some areas have been expanded or altered in line with the changing nature of the project, while background information on the project has been reduced. Key features of this summary are: • An emphasis on progress and activities that occurred during the reporting period as well as on trends, significant issues and project highlights and initiatives. • More attention to land reinstatement issues given that Right of Way (ROW) clearing and trenching activities are largely completed. • More emphasis on cultural heritage activities, both in recognition of the significant accomplishments in this field and the limited coverage in previous reports. • Greater detail on Management of Change. • Greater detail on the Complaints and follow-up processes. The last two items are in response to feedback from the Lender Group. As always, BTC welcomes feedback so that we can improve future versions of the report. MAIN ACHIEVEMENTS There have been significant achievements during the third quarter of 2004. The following stand out. The project has: • Resumed construction activities on the 17.6 km Borjomi section of the pipeline in August following agreement between the government of Georgia and BTC management on additional security measures. • Advanced construction to the Azerbaijan-Georgia border. • Sustained further improvements in the project’s Day Away From Work Case (DAFWC) frequency • Selected an oil spill response contractor for Azerbaijan and Georgia. A joint-venture partnership with the same contractor is in place for delivery of oil spill response in Turkey. • Launched a $2.4 million Improved Schools Project in Georgia. • Sustained good cultural heritage management throughout the quarter. 1 • Developed winterization programmes in Azerbaijan, Georgia and Turkey • Produced (with Botaş) a Project Bio-restoration Guide for field use by contractors in Turkey. • Progressed solid waste disposal contingency solutions in Azerbaijan and Georgia. In Azerbaijan a $5 million commitment by BP (BTC $750,000, ACG $4.25 million) to finance capital expenditure for non-hazardous waste landfill in the country that will be built to EU standards. CHALLENGES In addition to the achievements, the project focused on a number of challenges during the quarter. In particular it: • Increased efforts to reduce the length of open trench, introduced Project Open Trench Safety Standard for management and mitigation requirements and reinforced the community safety message • Addressed issues around commissioning and operation of incinerators in Georgia and Azerbaijan. • Began to plan long term bio-restoration by concentrating contractor efforts and resources in Georgia and Turkey. • Highlighted land reinstatement issues in Lots A and B in Turkey. • Stepped up efforts to supplement contractor environmental and social resources to ensure that construction environmental and social issues are managed both proactively and reactively. CONSTRUCTION PROGRESS Rapid progress was made during the quarter along the length of the 1,760km pipeline route. At the end of September 2004, virtually the entire pipeline ROW had been opened. In Azerbaijan construction at river crossings advanced substantially with installation works completed at the Shamkir, Dzegam Chai, Tovus Chai and Hassan Su rivers. Work continued at all the facilities including site works and camps. In Georgia construction activity was concentrated on higher elevation areas that become largely inaccessible in winter. In the Borjomi Special Section the first phase of trench backfilling was largely completed. The block valve programme was two-thirds completed and the check valve programme three-quarters completed. Construction at both pump stations continued. In Turkey progress was made at 19 of the 25 major river crossings with installations completed at the Karasu, Boran and Huseyinli rivers. Work continued at all facilities and the marine terminal at Ceyhan. The weld re-inspection programme that commenced in June continued through this quarter. A total of 3,106 manual welds are being re-inspected for cracks. Just under half have been examined and of these 117 cracks have been identified to the end of September. Of these, 32 have been repaired. Reinstatement typically follows a sequence – Phase 1 (sub-soil reinstatement, restoring original topography, temporary erosion control), Phase 2 (permanent erosion control, topsoil spreading) and Phase 3 (planting/seeding where required). Phase 1 reinstatement has occurred along 460 km or 26% and Phase 2 reinstatement has occurred along 365 km or 20% of the pipeline. (Note in Azerbaijan and Georgia, this is the 12m strip for BTC only) 2 At the end of September 20,435 people were working on the BTC project, comprising 3,963 workers in Azerbaijan, 5,962 in Georgia and 10,510 in Turkey. Employment of national staff in all three countries exceeded our targets by considerable margins. CONSTRUCTION PHASE: ENVIRONMENTAL AND SOCIAL STUDIES AND SURVEYS Studies and surveys continued to be undertaken in each of the three countries during the third quarter. All Host Government required environmental and social activities relating to the construction phase have now been completed. Five post-Environmental and Social Impact Assessments (ESIAs) studies continued in Azerbaijan. Vulnerable spur-thighed tortoises were removed and relocated from one part of the ROW and European pond terrapins were identified at Kura West prior to relocation - part of the Red Data Book registered species project. Groundwater level monitoring of wells drilled in the Karayazi area was conducted on a monthly basis. In Georgia four post-ESIA studies were ongoing. Three significant architectural properties lying partially within the ROW were avoided by rerouting the pipeline or using special construction techniques. In Turkey progress was made on seven remaining post-ESIA surveys. One – to identify sensitive fauna on the pipeline ROW ahead of construction - was completed. Four others involving reinstatement methods in sensitive areas, landscaping at Ceyhan terminal, the 2004 marine turtle survey at Ceyhan and air quality monitoring at Ceyhan progressed as planned. A project to collect sediment samples at 12 locations near the Ceyhan terminal began in July. A number of chance archaeological finds were made including Antique burial sites, pottery and settlement areas in Azerbaijan. Excavations continued in Azerbaijan and Georgia. In Georgia 260 potential sites or features have now been identified including 40 requiring large-scale excavation or salvage, 12 that were avoided by re-routing and 57 subject to limited excavation. In Turkey three cultural heritage surveys were completed. In July parts of a human skeleton were discovered and the remains excavated and removed to Kars museum. In August the remains of an Antique wall were found and assessed by archaeologists from Gazi University. In September stone foundations were uncovered – excavation was set for October. By the end of September the BTC line was clear for construction in all locations. MANAGEMENT OF CHANGE Project changes with potential environmental or social impact are assessed according to significance – Class I, II and III (the most significant, requiring notification to the Lender Group). During the third quarter there were no Class III changes in any of the three countries. A total of 33 Class I and 7 Class II changes were made during the quarter – one Class I and 1 Class II in Azerbaijan; 10 Class I and 2 Class II in Georgia; and 22 Class I and 4 Class II in Turkey. Class II changes in Azerbaijan related to alterations in the scope of work for the Kura West dual lay river crossing from open cut to micro-tunneling as a result of difficulties around methods and timing. Micro-tunneling was considered an alternative method that would allow the crossing to be executed within the contract period and is environmentally preferable to an open cut crossing. 3 In Georgia one Class II change involved permitting a total of 30km of open trench instead of 15km as specified in the Georgia ESIA. The increase reflected the creation of two mainline spreads instead of one in the country as well as the requirement to complete construction in high altitude areas before winter. The Project