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Created before Nov 2016
Last update: 2016-03-30 18:42:29 BankTrack
Katharine Lu, Friends of the Earth US
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About Pacific Refinery
The Ecuadorean government has been in negotiations with China since 2011 about the financing of a new project to increase domestic refining capacity. Despite Ecuador's rich crude oil reserves, the country must import the majority of its refined oil because of limited refining capacity. In 2013, China National Petroleum Corporation and state-owned PetroEcuador, signed a framework agreement to develop the Refinery of the Pacific, which is slated to begin operations in 2017. When fully operational, the facility will be able to process 200,000 barrels of crude oil daily. The project will be developed by China National Petroleum Company, PetroEcuador and the state owned company Petroleos de Venezuala (PDVSA). Currently, Petroecuador and PDVSA have invested 990 million. Project ownership is expected to be divided among the three developers: PetroEcuador would retain a 51 percent majority ownership , CNPC will take 30 percent and PDVSA will take 19 percent.
What must happen
Ecuadorian and Latin American NGOs have stated that should the refinery be built, the project should be reviewed and comply with local and international standards and laws.
Human rights and social issues
would violate the Collective Rights of
the Pueblo Montubio, indigenous communities
located along the coast of the nearby
the project site. The community of Río Manta
has filed two complaints about the project in
the Constitutional Court, on the grounds that
a) project did not respect a petition regarding
communities' collective territory and
paid indemnification of the purchased territory
from previous owner of the property, La
Fabril, and b) the project sponsors did not conduct FPIC procedures in assessing the
impact of the refinery on communities.
Ecuadorean NGOs, incuding Ecuadorean human rights group Center for Economic and Social Rights and environmental coalition Leave It In the Ground, strongly suspect that oil for the refinery may be supplied from the Yasuní National Park. Yasuní National Park is considered to be one of the most biodiverse regions in the world and was named a biosphere region by UNESCO. The region is home to numerous indigenous peoples, with some living in voluntary isolation. Oil drilling would essentially dispossess indigenous communities of their livelihood and culture. Additionally, extractive activities on the lands of indigenous peoples in voluntary isolation is classified as "ethnocide" in article 57 of the Ecuadorian constitution. Numerous communities, including those from the Shuar, Kitchwa, Waorani communities and the Tagaeri and Taromenane clans, would be irreparably impacted. In 2014, more than 700,000 signatures were collected to urge President Rafael Correa to conduct a public consultation on keeping Yasuní oil in the ground. However, Correa denied the request. Since then, Yasuní has become the most contentious issue between Ecuador's environmental movement and its government.
Applicable norms and standards
Other applicable regulations
Indigenous groups filed a lawsuit on the grounds that the project would violate the Ecuadorean Constitution. These articles protect indigenous groups and their rights.
- Article 57: Indigenous communes, communities, peoples and nations are recognized and guaranteed, in conformity with the Constitution and human rights agreements, conventions, declarations and other international instruments, the following collective rights.
» 57.4. To keep ownership, without subject to a statute of limitations, of their community lands, which shall be unalienable, immune from seizure and indivisible. These lands shall be exempt from paying fees or taxes.
» 57.5. To keep ownership of ancestral lands and territories and to obtain free awarding of these lands.
» 57.6. To participate in the use, ..., administration and conservation of natural renewable resources located on their lands.
» 57.7. To free prior informed consultation, within a reasonable period of time, on the plans and programs for prospecting, producing and marketing nonrenewable resources located on their lands and which could have an environmental or cultural impact on them.
» 57.21 The territories of the peoples living in voluntary isolation are an irreducible and intangible ancestral possession and all forms of extractive activities shall be forbidden there. The State shall adopt measures to guarantee their lives, enforce respect for self-determination and the will to remain in isolation and to ensure observance of their rights. The violation of these rights shall constitute a crime of ethnocide, which shall be classified as such by law.
ICBC reports that it is not involved in the Pacific Refinery project
Leave It in the Ground Initiative directly contacted ICBC's Beijing CSR department. After confirming that they received a letter outlining CDES and LINGO's concerns, an ICBC CSR staff stated that the bank could not comment on the letter, as the bank is not involved with the project.
Chinese and Ecuadorian press reports have indicated that Industrial and Commercial Bank of China would provide virtually all of the financing for the Pacific Refinery through two loan installments totaling about USD $9 billion. According to Chinese and Latin American media reports, the first loan of USD $2 billion would be given to PetroEcuador. The second loan, totaling USD $7 billion, was reported to be tenatively signed in September 2014.