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Big banks support rainforest oil project despite problems

LONDON PRESS LINK –

In the Putumayo region of the Colombian Amazon, Segundo Meneses’ daily routine takes him to the Chufiya River, its verdant banks and living waters inhabited by catfish and piranha. One morning seven years ago, he noticed a black film covering the shore. Where the meandering river turned black. According to him, it was an oil slick that sickened his young family and poisoned their cows and pigs.

British law firm Leigh Day is currently suing Amerisur, an oil company operating in the area, on behalf of 171 Putumayo farmers, including Meneses. That oil spill wasn’t the only complication with this particular oil operation. The nearby Siona natives say they refuse to pump the oil and will oppose it. The region is also flooded with coca production and insurgent groups have previously disputed drug territory, sometimes disrupting the flow of oil. Then there were reports by United Nations rapporteurs and an interfaith non-profit group that the oil company, Amerisur Resources PLC, may have been working with the rebels to pressure the Siona and Local farmers stopped protesting to keep the oil flowing.

However, this doesn’t seem to stop a Chile-based $800 million oil and gas company GeoPark Ltd. bought Amerisur two years ago. GeoPark has successfully lined up banks to help it acquire the Putumayo oil fields, showing that even as climate changes affect large swaths of the globe, backing up activities causes it’s still available. Demand for crude oil continued to rise rather than fall, creating an attraction for oil companies and banks to continue operating as they have for decades.

“If banks help fund a company like GeoPark, it looks like nothing,” said Maaike Beenes, head of banking and climate at BankTrack, an environmental advocacy group based in the Netherlands. they will refuse to touch. The deal, she said, has raised many red flags because of Amerisur’s legacy, “from doing business in a conflict zone to expanding fossil fuels in sensitive Amazon ecosystems, to to a history of violations of indigenous rights.”

The way GeoPark acquired the entire UK-based company Amerisur in January 2020, absorbing the company and keeping its brand, is a window into how some banks support fossil fuel projects even when they seem to go against their own policies.

Citibank and Itau Unibanco provided GeoPark with a bridge loan. The company then reached out to banks for help issuing $350 million worth of bonds to pay for the purchase, Bloomberg data and public statements show. Brazil’s Itau Unibanco and Citibank acted as “sealers” on the bonds, and Bank of New York Mellon agreed to facilitate settlement of these bonds. Bookrunners advertise bonds, coordinate orders, and generally use their reputation to build confidence in bond offerings.

This agreement allows GeoPark to acquire Amerisur’s key assets: 11 oil fields located in the biodiverse Putumayo Basin. They now comprise nearly a third of GeoPark’s hydrocarbon deposits, with the remainder scattered across Ecuador, Argentina, Brazil, Chile and Peru.

The following year, in 2021, US and European financial institutions helped GeoPark restructure its debt, generating more money for the company. Bank of America, Credit Suisse and JPMorgan have advised on the issuance of an additional $150 million in bonds, GeoPark’s press release shows.

Even being a customer of such important banks gives GeoPark credit, said former bond trader Jo Richardson of the Anthropocene Fixed Income Institute, who analyzed data and documents from the deal. .

A HOT RIVER

In an application to the British Supreme Court, Segundo Meneses called the Chufiya River “an important source of food for my family and the community.”

But the river was changed by the events of that day. According to court documents, an armed group attacked five Amerisur oil tankers and forced the drivers to dump all their crude oil into a wetland, where it emptied into the Agua Negra tributary, and from there pour into Chufiya and beyond.

For the Colombian oil industry, rebel attacks on oil infrastructure have been an epidemic for decades. But farmers say the attack was predictable, given the ongoing conflict in the area. » For a long time after that, cassava and crop farmers said their water was polluted.

Fishing has become impossible, Meneses said, and the number of edible fish has disappeared.

“I caught a fish that weighed 15 kg (33 lbs.) and it tasted like oil, and I couldn’t eat it,” he said in an affidavit.

In the dry season, the family has no choice but to drink water and do laundry in the river, causing the children to have diarrhea, rashes and abdominal pain.

“For us, water is life,” Meneses continued. “Maybe I will die tomorrow but my children will still live here and I don’t want them to live in an area with such polluted water.”

A GeoPark spokesperson said the company does not pollute, maintains the highest standards for environmental protection, and is committed to compensating for any negative impacts. A spokesman said Amerisur, now Amerisur Resources Ltd, has cleaned up the spill and will defend itself in court. As for liability for past acts, she said, it’s “a question of law and fact on a case-by-case basis.”

OIL IN CONFLICT AREA

To critics, Amerisur’s assets should never have found a buyer or source of financing. They said there were plenty of signs for banks to consider helping with the oil deal. Months before the initial bond issuance, Siona of the Buenavista reserve told GeoPark in a public statement that it would not allow oil production or “mining activities in our territory.” They said that Amerisur tried to take their natural resources through “illegal and fraudulent actions.” The tribe said it would protect its territory from “serious risks posed by toxic waste,” and “impacts on our spiritual practices.”

The Constitutional Court of Colombia recognized that Siona was in danger of being destroyed. Also prior to the bond deal, a 2019 ruling found that Amerisur had left explosives on Siona soil during seismic research. The company has been ordered to stop this operation. In the third, ongoing case, Buenavista Siona, who says their land is overlapped by two GeoPark oil fields, is seeking 52,000 hectares (128,000 acres) of disputed territory there to add to the site. their conservation.

GeoPark denied in an email that it was operating within the Siona reserve or additional land they seek. The company says relationships with indigenous people are based on “dialogue, respect and building trust”. The company said in 2021 it has asked Colombia to cancel its concession to exploit an oil field that Siona says overlaps with its land and is waiting for this to happen.

SPECIFICATIONS IN THE AREA

The Putumayo area is also a hotbed of coca cultivation and the cocaine trade. Small groups of former FARC rebels battle each other for control of the trade. One faction, Border Patrol Command, is listed as a terrorist organization by the US Treasury Department. In December 2020, prior to the second bond deal, a report by the respected Colombian human rights NGO made a strong statement. The Inter-Party Peace and Justice Commission accused Border Command of working with Amerisur to protect its oil operations.

The missing farmers told the committee that they were ordered by the rebels not to object to Amerisur’s exploration, with one rebel saying, “We have negotiated with the company and will ensure the operation. “

Five UN special rapporteurs on human rights also wrote to the head of the United Nations Development Program, Achim Steiner, warning: “Alleged links exist between the (Amerisur) company. ) and paramilitary forces present in the area, were denounced by the People of Siona before the Constitutional Court.”

The United Nations rapporteurs wrote: “Economic elements have allied with unusual armed groups to induce, in Indigenous communities, acts of violence … that drive indigenous peoples. displaced from their ancestral territory, thus clearing the way for … these projects.”

Colombian investigative news agency Cuestion Publica, which works with the Mongabay news organization, said two independent sources said paramilitary troops forced a farming community to attend meetings they were ordered not to interfere. return to Amerisur and should accept any offer they make. Two other independent sources confirmed an alliance between Amerisur and the rebel group, their reports said.

And the Colombia Ombudsman’s Office, the country’s human rights agency, has published a risk warning on its website saying it has received complaints from the community about pressure from “irregular armed organisations”. legal” to allow oil extraction. Amerisur was not included in that warning. But the report did note that Amerisur is one of the two largest operators in the Putumayo region.

GeoPark denies any allegations of cooperation with Border Command as “100% false”.

“GeoPark has never had any relationship with illegal armed groups and has asked its employees and the entire supply chain to do so,” a spokesman said.

BANK SUPPORT

Banks’ support fueled GeoPark. In April 2021, James F. Park, then CEO, said in a press release that the deal “represents the support and confidence we’ve earned in the capital markets.” international.” This puts the company in a position of “stronger, more flexible, less risky and less costly”, he said.

Citibank, Itau Unibanco and Bank of New York Mellon all say environmental issues are of great importance to them. Citibank and Itau also emphasized that they seriously consider social risks and conduct due diligence. Citi said it is strengthening these policies. JPMorgan said it reviews all customer-sensitive transactions.

Bank of America and Credit Suisse declined to comment.

Meanwhile, in the rainforest, oil pumping continues. Meneses and his fellow farmers hope for a judgment before Christmas; A British court ordered GeoPark to set aside £3.2 million ($3.8 million) to pay if the farmer wins.


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The Associated Press’s climate and environment coverage receives support from a number of private foundations. See more about AP’s climate initiative here. AP is solely responsible for all content



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