William E Browning, Thomas J Dimitroff

(ESIAs) were required to be produced by internationally recognised consultancies and

were world class.29 The disclosure package consisted of 11,000 pages, which were
translated into four languages and uploaded to the BakuTbilisiCeyhan website,
with each document subject to extensive public question-and-answer sessions and
further documented in published matrices. Twenty-three hard copies of the
environmental and social impact assessment were placed in various key public (and
publicised) venues around the world. The environmental and social impact
assessment process was further and significantly augmented by the anticipated
requirements of the presumed lending institutions, most notably the World
Bank/International Finance Corporation (IFC) and the European Bank for
Reconstruction and Development (EBRD). In terms of environmental compliance,
BakuTbilisiCeyhan agreed post-financing to be subject to external monitoring
initially on a quarterly basis and later on an annual basis to ensure compliance with
the contractually mandated environmental and social action plan (ESAP), a
comprehensive set of commitments by the project to its lenders. Each referenced
resulting report is made public.30 In addition, on the social side, specialised twice-
yearly monitoring ensured compliance with the contractually mandated social and
resettlement action plan (SRAP). Dedicated support for ongoing monitoring well
exceeds the initial environmental and social impact assessment requirements.
For extractive industries, and associated sectors such as pipeline infrastructure,
environmental issues can be a real or perceived Achilles heel. This is a critical risk
that must be recognised and in one or more forms be precisely and effectively
managed. As with other developments in the post-BTC era, states (and local
communities) have awakened to the very public nature of environmental issues and
their ability to affect not only public opinion but also to attract capital investment
in country, as well as debt. In terms of local and international reaction,
environmental issues resonate and can have lasting and negative impacts.31 For
projects oriented towards the extractive industry, management of environmental
issues is delicate and often only surfaces in the negative (ie, bad behaviour is
publicly exposed, but scrupulous environmental compliance and other related
successes are not generally publicly recognised). Thus, the necessary objective is to
put in place an environmental compliance strategy that is robust and can effectively
respond to external challenge.
As a risk mitigant, the BakuTbilisiCeyhan environmental standards and
processes are unparalleled in their rigour, but a legitimate question may be asked as
to whether this degree of rigour is realistic or applicable to every development.
Therefore, states have taken account of international trends, standards and models
for environmental analysis and ultimately compliance, and have adapted legislation
accordingly. While in many jurisdictions, this somewhat new state attitude to

29 [The BTC Project] will bring significant revenue along with high transparency, business and
environmental standards to Azerbaijan and Georgia, combined with prospects for sustainable economic
development EBRD Press Release November 11 2003.
30 See http://www.caspiandevelopmentandexport.com/ASP/PD_BTC.asp.
31 For example, note the deep-seated and enduring problems that international companies operating in the
Niger Delta have faced as a result of failing adequately to engage with local communities in the
appropriate mitigation of the local environmental and social impacts of their activities.

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