Big banks back rainforest oil project despite problems
ED DAVEY
Associated Press
LONDON (AP) — In the Putumayo region of the Colombian Amazon, Segundo Meneses’ daily routine has taken him to the Chufiya River, its verdant banks and waters full of catfish and piranhas. One morning, seven years ago, he noticed a dark film that bathed the shore. Where the river turned a bend, it turned black. It was an oil slick that he says sickened his young family and poisoned his cows and pigs.
British law firm Leigh Day is now suing Amerisur, the oil company operating in the area, on behalf of 171 Putumayo farmers, including Meneses. This spill was not the only complication of this particular oil operation. Indigenous people in nearby Siona say they reject oil pumping and will fight it. This area is also awash with coca production, and former rebel groups fight over drug territory, sometimes disrupting the flow of oil. Then there are reports from UN reporters and an interfaith non-profit group that say the oil company, Amerisur Resources PLC, may have worked with rebels to pressure the Sionas and local farmers to that they cease their opposition in order to keep the oil in circulation.
Yet none of that seemed to deter an $800 million Chile-based oil and gas company named GeoPark Ltd. from buying Amerisur two years ago. GeoPark has successfully lined up banks to help it secure the Putumayo oilfields, indicating that even with climate change affecting large areas of the globe, support for the activities that cause it is still available. Demand for crude oil continues to rise, not fall, underscoring the appeal for oil companies and banks to continue operating as they have for decades.
“If banks help fund a company like GeoPark, it seems like there’s nothing they’ll refuse to touch,” said Maaike Beenes, head of banking and climate at nonprofit BankTrack. , a Dutch-based environmental group. This deal, she said, raises many red flags because of Amerisur’s legacy, “from doing business in a conflict zone to expanding fossil fuels into sensitive ecosystems in the Amazon, in going through a history of violations of the rights of indigenous peoples”.
The way GeoPark bought the whole of UK-based Amerisur in January 2020, absorbing the business and retaining its brand, is a window into how some banks support fossil fuel projects even when they appear to be going wrong. against their own policies.
Citibank and Itaú Unibanco offered GeoPark a bridging loan. The company then turned to banks for help by issuing $350 million in bonds to pay for the purchase, according to Bloomberg data and public filings. Brazil’s Itaú Unibanco and Citibank served as “bookrunners” on the bonds, and Bank of New York Mellon agreed to facilitate payments on them. Bookrunners advertise bonds, coordinate orders, and generally use their reputation to lend confidence to bond offerings.
The deal allowed GeoPark to secure Amerisur’s greatest asset: 11 oilfields spread across the highly biodiverse Putumayo Basin. They now account for almost a third of the GeoPark’s hydrocarbon deposits, with the rest split between Ecuador, Argentina, Brazil, Chile and Peru.
The following year, in 2021, US and European financial institutions helped GeoPark restructure its debt, making more money available to the company. Bank of America, Credit Suisse and JPMorgan advised to issue an additional $150 million in bonds, according to GeoPark press releases.
Even being a client of such major banks gave GeoPark credibility, said former bond trader Jo Richardson of the Anthropocene Fixed Income Institute, who analyzed data and deal documents.
A SULLIEE RIVER
In a UK High Court filing, Segundo Meneses called the Chufiya River “an important source of food for my family and the whole community”.
But the river was changed by the events that day. According to court documents, an armed group attacked five Amerisur tankers and forced the drivers to empty their loads of crude oil into a wetland, where it flowed into the Agua Negra tributary, then into the Chufiya and beyond.
For Colombia’s oil industry, rebel attacks on oil infrastructure have plagued Colombia for decades. But the farmers argue that this attack was predictable, given the ongoing conflict in the area. For a long time afterwards, cassava and plantain farmers say, their water was contaminated.
Fishing has become impossible, Meneses said, the edible fish gone.
“I caught a 15 kilo (33 pound) fish and it tasted like oil, and I couldn’t eat it,” he said in an affidavit.
During the dry season, the family had no choice but to drink and wash in the river, which caused them diarrhoea, skin rashes and stomach aches, he said.
“For us, water is life,” continued Meneses. “Maybe I will die tomorrow but my children will still live here and I don’t want them to live in an area where the water is so polluted.”
The GeoPark spokesperson said the company caused no contamination, maintains the highest standards to protect the environment and is committed to offsetting any negative impact. Amerisur, now Amerisur Resources Ltd, has cleaned up the spilled oil, the spokesman said, and will defend itself in court. Regarding liability for past acts, she said, these are “matters of law and fact on a case-by-case basis”.
OIL IN A CONFLICT ZONE
For critics, the assets of Amerisur should never have found takers, nor financing. There have been many red flags for banks considering helping with this oil deal, they say. Months before the first bond issue, the Sionas of the Buenavista Reserve told GeoPark in a public statement that they would not allow oil production or “extractive operations in our territory.” They said Amerisur had previously attempted to seize their natural resources through “unlawful and rigged actions”. The tribe said it would protect its territory from “serious hazards from toxic waste” and “impacts on our spiritual practices”.
The Colombian Constitutional Court recognizes the Siona as threatened with extermination. Also before the bond deal, a 2019 ruling found that Amerisur left explosives on Siona land during seismic surveys. The company was ordered to cease this activity. In a third ongoing case, the Buenavista Siona, who claim their land is covered by two GeoPark oil fields, are asking for 52,000 hectares (128,000 acres) of disputed territory to be added to their reservation.
GeoPark denied in an email that it was working in the Siona reserve or the additional land they were looking for. Relations with indigenous peoples are based on “dialogue, respect and the establishment of trust”, the company said. The company says that in 2021 it asked Colombia to rescind the oilfield concession that the Sionas say overlaps their land, and is waiting for that to happen.
PARAMILARS IN THE AREA
The Putumayo region is also a hotbed of coca cultivation and cocaine trafficking. Breakaway groups of former FARC rebels are fighting for control of the trade. One faction, Border Command, is listed by the US Treasury Department as a terrorist organization. In December 2020, ahead of the second bond deal, a report from a respected Colombian human rights NGO made a strong assertion. The Interfaith Commission for Justice and Peace alleged that Border Command was collaborating with Amerisur to protect its oil operations.
The displaced farmers had told the commission that the rebels had ordered them not to oppose the exploration of Amerisur, with one rebel reportedly saying, “We have negotiated with the company and we will secure the operation.
Five United Nations special rapporteurs for human rights have also written to the head of the United Nations Development Program, Achim Steiner, warning: before the Constitutional Court.
The UN rapporteurs wrote: “Economic actors have allied themselves with irregular armed actors to generate acts of violence within indigenous communities that … displace indigenous peoples from their ancestral territories, thus paving the way for … these projects.
Colombian investigative newspaper Cuestión Pública, in conjunction with news agency Mongabay, said two independent sources said paramilitaries forced a farming community to attend meetings where they were ordered not to do stand in the way of Amerisur and accept any offers it makes. Two other independent sources confirmed an alliance between Amerisur and the rebel group, according to their report.
And Colombia’s Ombudsman’s Office, the country’s human rights agency, posted a risk alert on its website saying complaints had been received from the community about pressure exerted by “illegal armed actors”. to allow oil extraction. Amerisur was not named in this alert. But the report notes that Amerisur is one of the two largest operators in the Putumayo region.
GeoPark dismissed any allegations of working with Border Command as “100% false”.
“GeoPark has never had a relationship with illegal armed groups and demands the same of its employees and the entire supply chain,” a spokesperson said.
BANKING SUPPORT
Bank support supported GeoPark. In April 2021, then-CEO James F. Park said in a press release that the deal “demonstrates the support and credibility we have earned in international financial markets.” This puts the company in a “stronger, more flexible, less risky and less costly position,” he said.
Citibank, Itaú Unibanco and Bank of New York Mellon all said environmental issues were of great importance to them. Citibank and Itaú also stressed that they seriously consider social risks and exercise due diligence. Citi said it is reinforcing these policies. JPMorgan said it is reviewing all sensitive customer transactions.
Bank of America and Credit Suisse declined to comment.
Meanwhile, in the rainforest, the pumping of oil continues. Meneses and his fellow farmers are hoping for a judgment before Christmas; UK courts have ordered GeoPark to set aside 3.2 million pounds ($3.8 million) to be paid if the farmers win.
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