Eni´s Investment in Tar Sands and Palm Oil in the Congo Basin - Resource Governance
Executive Summary
At this year’s G8, the major economies and energy producers recognized that dealing with the interlinked issues of energy investment, access and availability and tackling climate change is the key challenge to their countries. They also promised resolute action to address the energy poverty in which most of the world’s citizens still live. This is particularly stark in Africa, where two thirds of sub-Saharan households do not have access to a secure energy supply.
One country with very poor energy access is Republic of Congo (Brazzaville), a small central African state where 70% of the population live under the poverty line, despite the country’s oil wealth. Congo, besides being sub-Saharan Africa’s fifth largest oil producer, is also rich in the biodiversity of its forests, which cover two thirds of the country. The Congo Basin forest is both a key resource for local people and a giant carbon sink that plays an increasingly vital role in protecting our climate. However, Congo’s record on environmental and human rights protection and on transparent management of the country’s natural resources is extremely poor. The country currently has no functioning environmental regulation. Despite this, Congo’s government wishes to take on a leading role in stewarding the global resource of the Basin.
Eni, formerly the Italian state oil company, is one of the top ten energy companies in the world. It is still 30% owned by the Italian state. Eni is undertaking a new multi-billion dollar investment in Congo in developing tar sands, oil palm for food and bio-diesel and gas-fuelled electricity. This would be the first tar sands project in Africa and the agro-fuels project would be one of the largest on the continent. Eni has the biggest footprint in Africa of any oil company and wants to build long-term partnerships with countries like Congo extending beyond the energy sector. The company is also currently ranked as the world’s most “sustainable” oil and gas company and is keen to promote its
green credentials.
The agreements made between Eni and the Congolese government have not been disclosed. Research has revealed an almost total lack of public awareness of the investments in Congo. There has been no meaningful engagement at local or national level by Eni or by the government with Congolese citizens about the projects’ potential fiscal, social and environmental impacts. This violates Eni’s own environmental and human rights policies.
Local communities affected by oil production have long complained about inaction by corporations and government to address its impacts. Gas flaring levels at the huge onshore M’Boundi oil field, now operated by Eni, are extremely high (currently over 1 billion cubic metres per year) and have been a health and environmental hazard for years. Flaring is not only a violation of the right to health, but a huge waste of resources and a major contributor to greenhouse gas (GHG) emissions. Eni’s plans to turn the gas into electricity are welcome, but the company still needs to address flaring’s current impacts on communities. The extent to which the plant will serve Congo’s energy-starved consumers is also unclear, as is its governance and financing structure. Eni also intends to apply for emissions reductions credits through the UN’s Clean Development Mechanism for the electricity project: this is highly problematic for several reasons, including the fact that the plant could provide energy for any high-emitting tar sands development.
Eni’s investments in tar sands and oil palm are inherently high-risk. In other parts of the world, such investments have been heavily criticized for causing social and environmental damage, both locally and globally. Extraction of tar or bitumen and its processing into synthetic crude is extremely intensive in water and energy use. In Alberta, Canada, the only place where tar sands are currently being developed, it has led to water depletion and pollution, with health impacts on communities, deforestation of Canada’s boreal forest and habitat destruction. Production of a barrel of tar sands bitumen is 3-5 times more intensive in terms of GHG emissions than production of a barrel of conventional oil. Canada now has the highest emissions per capita of any G8 country and is being increasingly criticized for its inaction on climate change. Many civil society groups, local indigenous residents and scientists are now calling for a moratorium on new tar sands investment.
Investment in monoculture plantations of oil palm and other crops to produce agro-fuels, encouraged by targets introduced by national governments and the European Union, is a cause of the deforestation that accounts for around 20% of global greenhouse gas emissions. By replacing tropical forests and other ecosystems, monoculture plantations lead to a serious loss of biodiversity. The land-use changes they entail are also linked to increased food insecurity and to land conflicts, human rights abuses and threats to indigenous populations.
The risks of Eni’s investments are heightened by the governance deficit within Congo, lack of transparency and community consultation and the area’s ecological sensitivity. Eni has stated publicly that none of the investments will take place on rainforest or other areas of high biodiversity and will not involve resettlement of people. Yet the company’s own studies reveal that the tar sands exploration zone comprises up to 70% primary forest and other highly bio-diverse areas. It also includes human settlements. There is no clarity as to what extraction and processing technologies Eni would use for the tar sands and it is impossible to predict the project’s impacts on the country’s water and energy resources.
Eni’s investment throws into doubt the company’s claims to be a player in sustainable development. It also raises wider issues about the social and environmental costs of supporting such highcarbon, export-driven energy investments in ecologically highrisk areas with minimal transparency and human rights protection. Particularly given the urgent need to tackle run-away climate change and improve energy access for the poorest. The Congolese government’s collaboration with these projects undermines the credibility of its bid to be an environmental guardian of the Congo Basin. The Italian government is Eni’s largest shareholder. Given its oversight role and international commitments, it has a responsibility to ensure that any investment by Eni involves due consideration of its potential developmental, human rights and environmental impacts.
In conclusion, it appears increasingly clear that there are some forms of new energy investment, (both fossil-fuel and so-called “renewable”) that are particularly damaging to the local environment and communities and to our climate. For these reasons, they should be considered too high risk to pursue – especially in developing countries with very weak political and environmental governance. Eni’s plans to develop tar sands and oil palm in Congo fall into this category.