The initial phase of ACG, the Chirag Early Oil project, marked the beginning of major extractive industry lending in the region by the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD). However, the project also initiated a chain of environmental and social dangers accompanying oil and gas development.
The ACG area has experienced numerous accidents and oil spills. For example, wastewater was discharged directly into the sea, despite the Environment Impact Assessment’s (EIA) assurance that “water will be discharged 50 meters below the Caspian mean level to prevent damage to the productive biological zone.” The Western Route Export Pipeline (WREP) puts five sensitive conservation areas in danger, while, at the Northern Route Export Pipeline (NREP) in 1997, a thousand tons of oil were accidentally discharged from a corrosion hole. The WREP has been the site of several oil spills: One in 2002 in western Georgia, where two tons of oil spilled over 100 square kilometers, and another in 2005 when 60 tons of oil spilled in the Georgian Gardabani reserve, near a local village.
Finally, transparency and disclosure was initially a problem. The EIA investigation yielded results that were not previously available to either the citizens or the banks, and major environmental decisions were made unilaterally, without the banks’ and citizens’ participation. At the IFC’s request, however, the production sharing agreement (PSA) and host government agreements (HGAs) were disclosed for the BTC pipeline and ACG projects.