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Emerald Energy Exploits Colombian Andes

by Elias CabreraSpecial to CorpWatch
March 18th, 2012

Emerald Energy oil well in Colombia. Photo by Elias Cabrera

A thick fog flows over the eastern range of the Colombian Andes. Here and there, the constant wind lifts the clouds to reveal lagoons, cloud forests, and páramo, an Andean alpine ecosystem known as a “mountain-top sponge” for its massive water-holding capacity. Descending lower into the Upper Magdalena Valley, about 400 kilometers southwest from Bogotá, rural communities farm a wide variety of fruit and vegetable crops, and raise animals that not only sustain families, but help feed Colombia´s major cities.

In the municipal districts of Gigante and Garzón in the department (province) of Huila, the bucolic setting is interrupted by the platforms of several oil wells belonging to Emerald Energy PLC.

“Emerald Energy is destroying the land and water,” Armando Acuña, a municipal council member from Garzón, told CorpWatch. “Their exploration, with underground explosions is causing landslides and the ground to sink, homes, and crops are being destroyed and we are losing our water.”

Emerald Energy, founded in London in 1996, was awarded its first exploration permit for the Matambo Bloc in Gigante. (Governments typically auction off oil exploration rights on specific parcels of land known as blocks or blocs) After drilling the first well in 1998, the company began a rapid expansion: It built multiple platforms in Matambo, and opened up new well sites in the Llanos Basin and Middle Magdalena River Valley in Colombia, as well as in other countries including Peru and Syria.

On August 9, the Colombian Ministry of Environment and Sustainable Development issued Environmental License 1609 to Emerald Energy, allowing it to install five new platforms and three oil wells in the VSM 32 Bloc, adjacent and uphill of the Matambo Bloc. This territory is vital to the region´s food security, provides water for more than 200,000 people, and contains unique and sensitive ecosystems that are supposed to be protected as part of the Páramo Regional Natural Park and the Amazon Forest Reserve.

Four months after the permit was authorized, campesinos opposing the project gathered in the farming village of Zuluaga. “I believe we are all united here because of the Emerald´s crude behavior within our region,” said Luis Jorge Sanchez Garcia, Huila’s former governor. “It is vital that we unite to protect our natural resources from oil development, [and] in particular protect our water. If some disaster happens, it will not affect just the countryside where the operations are; it will affect our entire region. With the information we have available now, Emerald´s presence in the region is not to our benefit.”

Transferring Emerald

Although Emerald Energy is ostensibly a UK company, it is no longer controlled in Britain. In 2009, the company was purchased by the Chinese energy and chemical giant, Sinochem Corporation for U$875 million, a year after Emerald declared revenues of $86 million in 2008.

Founded in 1950, Sinochem, China´s largest trading company, was initially operated by the Chinese state. During the year of the Emerald Energy acquisition, Sinochem became a joint-stock company, which now comprises more than 100 affiliates globally, and includes major shareholders such as JPMorgan, Standard Life, and Legal & General.  In 2011 Fortune Global 500 put Sinochem´s revenue at $49.535 billion employing over 50,000 people.

After becoming Sinochem’s wholly-owned subsidiary, Emerald’s willingness to share information with the public changed. In early 2010, Emerald Energy’s website was purged, leaving only a single page with contact information and the note: “Emerald does not provide comment on company activities.”

The pre-Sinochem site had included a detailed history, information, and maps of all Emerald’s operations. It described the Matambo Bloc as extending over an area of 69 square kilometers, noting that Emerald holds exclusive rights through the year 2024.

The Footprint on Matambo´s Face

How the company exercises those rights will impact major and sensitive páramo ecosystems: the high altitude, tropical mountain tundra above the forest line, and below the permanent snowline. Unique to the Americas, páramo are mostly found in the Andes Mountains, with more than 60 percent occurring in Colombia. The vegetation, a unique mixture of lichens, mosses, algae and grasses, has incredible water retention capacity, birthing major rivers such as the Orinoco, Magdalena and Amazon.

The Matambo Bloc, which sits below the páramo in the Magdalena Valley, gets its name from a mountain in the shape of the face of a giant who, according to local legend, will one day arise from the earth. Adjacent to the Matambo Bloc, the mountain Matambo is named for a native warrior who participated in uprisings led by the woman warrior, la Gaitana, against the Spanish in the 1530s in Huila.  

Since the Matambo Bloc was opened, the region encompassed by the operations has seen a steady deterioration of its land and water, according to the Intersectorial Association of Gigante & Garzón (AISEG). In 2000, two years after the Gigante 1 well was drilled to 4,815 meters, “there was an explosion that resulted in a fire that burned for 25 days with a flame that was about 30 meters high, shutting down operations,” Jorge Enrique Alvarado, a municipal council member, told CorpWatch. “This whole area had a dense hazy cloud over it during that whole month and the area nearby had all sorts of burnt oil and ash accumulated on their crops, cattle and fish ponds.”

Alvarado, a young and newly elected politician, spends much of his time traveling the region’s countryside by motorcycle organizing with campesinos who are resisting Emerald’s activities, notably by protesting against “resolutions” issued by the Colombian Ministry of Environment in support of the company’s extractive operations almost every year.

Alvarado and other activists are particularly critical of Resolution 0647, issued in the 2008 by the Ministry of Environment. The ruling allows Emerald to construct three new platforms, each with capacity of up to four oil wells. It also updated the requirements for waste disposal, water use, maintaining of local roads, and for investing 1 percent of project costs in environmental and water conservation projects to benefit the community.

“As part of that Resolution,” Alvarado explained, “the company was supposed to work directly with the community to implement a community education project on environmental stewardship and with the CAM (Regional Autonomous Environmental Corporation),  and reforest an area no less than 11 hectares. Neither of these requirements has been fulfilled. The repairs and expansion for the overused roads that were mandated for that year are just starting now, three years after the fact,” he said.

One example of the consequences of the watered-down regulation can be seen in the countryside of Cascajal, which sits on the Loro River, a waterway that is vital to the region’s ecosystems and agriculture.

In 2009, Resolution 0479 provided another example of how the government buoyed company prospects. In it, the Ministry of Environment changed Emerald´s environmental license to permit it to take a larger amount of surface directly from the Loro River to be injected into Cascajal Well 1.

The well created so much erosion and noise that the rural community was forced to abandon its new school, built 50 meters from the oil platform, and return to a decrepit building situated by an eroding cliff.

“The oil company has pushed us back to our old school,” said a shy, strikingly sincere fifth-grade girl, “because we could not focus with all noise from the flame and all that happens over there [at the new school].”

“I have consistently had migraines ever since the company started operating near the school,” said lead teacher, Amparo Montealegre, as she stood in front of a cracked wall. “This school, as old as it is and with the seismic tests the company does, is even more dangerous near this cliff.”       

Communities Defend their Territory  

In early January, the communities affected by Emerald Energy PLC joined other environmental movements in Huila to create the Regional Movement for the Defense of the Territory. The group targeted the Quimbo Hydroelectric Project, a dam currently under construction in central Huila that, the activist organizations say, will threaten the region´s environment, food security, economic and social fabric, and will displace campesino communities. For two weeks beginning January 3, about 1,000 people from the Regional Movement blocked the highway to the Quimbo dam construction site.

A similar protest was set up to try to stop Emerald’s expansion. “As of November 2011 we have been blocking the entrance to all operations in VSM 32 Bloc, and do not intend to allow any machinery to enter,” said Alberto Calderon, a member of Intersectorial Association of Gigante & Garzón (AISEG) at a public roundtable that followed the blockade.

The middle-aged farmer lives with his wife, two children and some cows and chickens on a small, self-sufficient farm that produces coffee, avocados, onions, and cacao. His land borders Emerald’s oil well Iskana 1.

That proximity drew Calderon and his family into a struggle, repeated across the globe, between locally-controlled sustainable culture, and the machinery of national progress and corporate profit.

“Nothing they have brought us has helped us,” he said of Emerald. “Our rivers are drying. They foment divisions within the community, and our youth do not want to work the land after they have worked for the company. We are campesinos, and to work the land is what we know, and it is our culture. The oil companies are bringing in cultures and practices that we do not know and we do not want. We the people of Miraflores have become aware of what is going on and we will not let them kick us out of our home,” Calderon said.

In public meetings with Huila’s Governor Cielo Gonzalez in late January, Emerald Energy Legal Issues Representative Juan Manuel Cuellar defended the company’s commitment to affected communities. “Emerald participated in the building of the school in Alto Corozal and the renovations of the cafeterias in the schools of Los Medios, Bajo Corozal, and the Silvania Educational Insitute. The company has also invested nearly $3 million in repairing the region´s roads,” he said.

On February 15, Cuellar held another public meeting in the city of Neiva with Gonzalez. “The environmental license that was granted for the operations in the VSM 32 Bloc is one of the strictest in the country,” Cuellar told the gathering. “The company will respect it with responsibility and vigor, and there will be no exploration activities within Regional Natural Park Páramo of Miraflores Peak boundaries.”

Cuellar described other ways Emerald was helping the local communities, including road maintenance, repairing buildings, and making other investments that help offset its impact. “Matambo Bloc includes three oil wells in production, three more wells being drilled and daily produces about 2,500 barrels of crude oil of which a 20 percent is paid to the Municipality of Gigante,” he said.

Cuellar did not respond to requests from CorpWatch to explain what measures the company was taking to minimize negative environmental impacts, how far the five oil wells in that bloc were from the national park boundary, and the situation facing the school in Cascajal.

The Struggle for Miraflores

FARC threatens to force Emerald Energy out of Caqueta

Just over the Oriental Mountain chain of the Colombian Andes, south of Huila, Emerald Energy operates in the Amazonian oil-rich departments of Putumayo and Caqueta where the company’s 12-well field in the region of San Vicente del Caguan, Caqueta produces about 600 barrels a day.

Security concerns in this region have repeatedly plagued Emerald Energy’s operations. In November 2011 the company temporarily halted activity in Los Pozos, Caqueta. In June the FARC (Revolutionary Armed Forces of Colombia) kidnapped four Chinese contract workers from Los Pozos, and is still holding them for ransom. Two months later in the same region, the FARC attacked and incinerated six Emerald Energy tanker trucks leaving the region with crude oil.

In September a similar attack left one person dead and five trucks destroyed along the same route, prompting the company to suspend operations temporarily. And on March 5, an attack from the FARC's Teofil Foreo Mobile Column caused the company to suspend activities in the San Vicente del Caguan Bloc for four days.

Energy and Mines Minister Mauricio Cardenas and governor of Caqueta, Victor Isidro Ramirez, have offered Colombian Army troops to provide greater protection to Emerald Energy. Nonetheless, on March 14, the two local transportation companies contracted by Emerald to transport the crude oil out of the Caqueta, Rapientrega and Cootransamazonía areas announced an indefinite strike owing to the deaths of the truck drivers. Protests against the violence were scheduled for March 16.

Uphill from the area of the Matambo Bloc, the climate cools and the crops and ecosystems adapt to the different environmental conditions. This is the area of the Miraflores Park and the VSM 32 Bloc, where activists are trying to block Emerald´s five new wells.

The Miraflores Park was established in 2005, after years of activism to support maintaining essential ecosystems. It is home to an array of biodiversity that includes endangered species such as the spectacled bear Tremarctos ornatus, puma Puma concolor, the endemic rufous-fronted parakeet Bolborhynchus ferrugineifrons and a variety of plant, fungi, bird, and butterfly species.

Rigoberto Urriago, a campesino, environmentalist and local hero fought to save Miraflores, and served as a member of the commission that helped establish the park. After Urriago was murdered in 2010, the park took his name as part of its title. His killers have not been brought to justice.

In the lower altitudes of this area sits the village of Silvania within a massive sea of coffee plants. “This area supports the food security of all of Colombia. The coffee, plantain, lulo, grenadilla and other fruit crops that are produced here are exported all over the country to cities like Bogotá, Medellin, and Cali,” explains Edgar Quintero, a local shopkeeper and board member of the Intersectorial Association of Gigante & Garzón (AISEG), as he sips a cup of locally grown coffee in front of his corner store in Silvania’s small, nearly empty central plaza.

“This new license allows Emerald exploration and extraction rights up to 1,900 meters above sea level,” says Quintero.  Because the aqueducts for Gigante and Garzón are below 1,800 meters, “If any sort of spill or explosion were to happen, it would be a disaster since our water for drinking and irrigation comes from a source that is downhill and downstream from these new oil wells,” he says.

Higher up from of the agricultural zone, no more than three kilometers past the Iskana 1 oil well, is the border of the Miraflores Park. “The company and the Ministry of Environment are falsely saying that only the highest area of the páramo is protected” said activist Calderon. “[But] all of the cloud forests around the páramo are also [supposed to be] protected according to Intersectorial Association of Gigante & Garzón (AISEG). We the local farmers fought for years with illegal loggers and poppy growers, to protect this region. People were killed in that process. After all of that, the government just hands it over to a multinational company.”

“Within the Matambo Bloc, Emerald Energy has destroyed the land and water, devastated community self-reliance and done little to remediate any of this,” added Calderon. “Already the Iscana wells are too close to the Guadaleja creek and the park´s buffer zone. We are seeing that if we do not stop Emerald Energy, the VSM 32 Bloc will be just as bad if not worse than Matambo.”   

Governor Gonzalez has offered little hope to the region´s inhabitants. In announcing upcoming meetings with the Minister of Environment Frank Pearl in Neiva, the governor echoed the minister´s pronouncement-- that there “will be no way to revoke the environmental license,” Gonzalez said. “Changes or modifications may only be possible with complaints that are backed with evidence.”    

Last year´s Resolution 1609 granted new exploration rights to Emerald Energy for 23 hectares that includes protected páramo and cloud forests ecosystems, as well as an agricultural area that is rich in lulo, grenadilla, coffee, avocado, tamarillo, blackberries, and other fruits.

As the last rays of sunlight lit the western slope of the mountain, Calderon looked across the fertile landscape of fruits and vegetables and into an uncertain future:  “This struggle for the land, the water, the forests and the páramo, it is not just for us and the earth. It is so our children have something to live from as the earth´s climate continues to change.”