European funding for a Lukoil gas project in Azerbaijan tramples the EU’s commitment to both climate action and human rights

A USD 500 million loan for the share of Russian gas giant Lukoil in a major gas project in Azerbaijan has been approved yesterday by the Board of Directors of the European Bank for Reconstruction and Development (EBRD). Yet, the decision will significantly hinder Europe’s commitments to decarbonise as well as to advance democracy.

Developed by a consortium of carbon majors led by BP, the Shah Deniz stage II gas field is essentially the cornerstone for the Southern Gas Corridor, the European Commission’s flagship energy project, promoted as means to alleviate Europe’s reliance on Russian gas imports.

Yet, the EBRD’s decision to support the Shah Deniz project stands in stark contrast to its own statutes. Article 1 in the agreement establishing the EBRD states: “Under the EBRD Agreement, the parties must be committed to human rights, multi-party democracy, rule of law and pluralism.” But the authoritarian Aliyev regime, thriving on Azerbaijan’s gas and oil riches, has been systematically cracking down on civil society and human rights defenders. In fact, with 80 political prisoners – among them investigative journalist Khadija Ismayilova and prominent human rights lawyer Rasul Jafarov – Azerbaijan now has more activists behind bars than Russia and Belarus together.

Moreover, with the UN’s decisive Paris climate summit just months away, entrenching the role of fossil fuels in Europe’s energy mix only hampers the EU’s efforts to combat climate change. Multiple studies have shown that the world must leave most of the remaining fossil fuels in the ground if it is to avoid the harshest of climate change impacts, and a recent report from Carbon Tracker warned that gas investments are at risk of becoming stranded assets.

With EU gas consumption on the decrease, and likely to continue falling over the next few decades, as the European Commission’s own Energy Roadmap 2050 projects, the Southern Gas Corridor can end up as a massive stranded asset on investors’ sheets.

“The EBRD’s decision yesterday is a shameful blemish on the EU’s efforts to promote human rights, climate action and sustainable development,” says Fidanka Bacheva-McGrath CEE Bankwatch’s EBRD Campaign Co-ordinator.

On Monday, the Sports for Rights coalition, CEE Bankwatch Network and 15 other NGOs have sent letters to country Directors and EBRD President Suma Chakrabati calling on them not to lend public money to a project that so blatantly contravenes the Bank’s own mandate.

“Any loan to Lukoil to develop Shah Deniz II will squeeze the space for civil society even further as it bolsters the current regime,” the letter said. “A substantial improvement in the respect of basic rights and freedoms should be achieved before you consider lending to Azerbaijan’s oil and gas sector”.

For more information contact:

Fidanka Bacheva-McGrath
EBRD Campaign Co-ordinator
fidankab@bankwatch.org
Twitter: @fidankabmg

Note to editors:

For more on the Southern Gas Corridor’s false promise see the NGO report “Pipe Dreams: Why the Southern Gas Corridor will not reduce EU dependency on Russia”:
https://bankwatch.org/news-media/for-journalists/press-releases/pipe-dreams-why-southern-gas-corridor-will-not-reduce-eu-d