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The Relation of the Oil and Gas Industry with Indigenous Peoples in Latin America Miguel Angel Santiago – ECOPETROL – Bogota, COLOMBIA Juan Miguel Moyano – ARPEL – Montevideo, URUGUAY Abstract The Regional Association of Oil and Natural Gas Companies in Latin America and the Caribbean (ARPEL) gathers both state-owned and private oil and gas companies, representing more than 90% of the upstream and downstream production. In the late 80’s, and considering the projections of oil and gas explorati
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  1 The Relation of the Oil and Gas Industry withIndigenous Peoples in Latin America Miguel Angel Santiago – ECOPETROL – Bogota, COLOMBIA  Juan Miguel Moyano –  ARPEL – Montevideo, URUGUAY    Abstract The Regional Association of Oil and Natural Gas Companies in Latin America and theCaribbean (ARPEL) gathers both state-owned and private oil and gas companies, representingmore than 90% of the upstream and downstream production.In the late 80’s, and considering the projections of oil and gas exploration and productiondevelopment projects in frontier areas dwelled by indigenous peoples, ARPEL member companies became aware of the potential future concerns that this issue would represent totheir operations. These concerns were accentuated by the fact that Latin America has therichest biodiversity of the world, counting with 46% of the world tropical forests, 40% of tropicalanimal and vegetal species and 31% of freshwater reserves.Furthermore, the rapid increase of environmental regulations and legislation, and the increasinginternational attraction on environmental and social-cultural issues in sensitive areas have madethe management of these issues critical to the companies’ success. Failing to identify andmitigate these risks has had significant implications, including projects’ delays, excessive costsand –eventually- abandonment.In 1999, ARPEL was invited to join the tripartite (indigenous peoples, government and oilindustry) regional dialogues being fostered by the World Bank and OLADE –Latin AmericanEnergy Organization. At present, the three parties are developing a project, lead by COICA –Confederation of Indigenous Organizations of the Amazonian Basin-, OLADE –on behalf of governments- and ARPEL. The three parties are developing commonly agreed guidelines andmechanisms that allow for planning and designing a regionally homogeneous regulatoryframework to develop oil and gas projects in line with sustainable development concepts.This paper describes the experience gathered by ARPEL since 1987 with particular emphasison the tripartite dialogues and the guidelines being presently developed to set the basis for thefuture regulatory framework of oil and gas industry relations with indigenous peoples in Latin America. Background During the 90's, oil and gas exploration and exploitation activities geared their operationstowards more sensitive areas from the environmental, cultural and social points of view.Likewise, organizations of indigenous peoples who had srcinally inhabited this basin have beenable to voice their claims more clearly for territorial rights, respect for their identity, preservationof their culture and the improvement of their social and economic conditions.The increasing speed of oil and gas exploration and its spread towards more remote andsensitive areas of the world, has constituted a challenge to the operating companies to properlyidentify, understand and manage risks that are not technical but related to operations in theseareas. It is –thus- to be expected that the operators in these areas minimize the social-environmental impact, allow the different stakeholders to participate in decision making andimplement social programs that contribute to the sustainability of indigenous peoples and localcommunities.  2In Latin America, the indigenous organizations, environmentalist groups and NGOs, haveincreased their objections to oil projects as a way to attract the attention of the public opinion onsocial and economic issues. In general, these strategies have been successful but have paidthe toll of confusing technical issues with thorny debates on sustainable development, equity of the parties involved and popular participation.The enthusiasm for the potential resources of Latin America is increasingly conditioned by theconcerns on environmental issues. Many of the areas that constitute objectives for oildevelopment, especially in South America, coincide, for example, with sensitive and threatenedecosystems that constitute the habitat of indigenous peoples, many of which have had little or no contact with the external world. These concerns are increased by the fact that Latin Americahost the richest biodiversity of the world, accounting for 45% of tropical forests, 40% of tropical,animal and plant species and 31% of freshwater reserves.It has, therefore, been important to set up a responsible approach to environmentalmanagement, including the consideration of the living conditions of local inhabitants, the ethniccommunities and the possible effects that will result from the proposed developments. For many operators the handling of some of these issues is new and the approach towards aneffective technical coordination of social and environmental issues with the development of oiland gas field operations, has been relatively innovative and creative. The results should betested during the development of the project with the participation of the indigenous peoplesand local communities.Companies that obtained concessions and operation contracts in some areas of the sub- Andean basin have had to develop, in many cases following their own initiative, participatoryand consultation processes in order to define compensations without clear regulations that statethe precise rules of the game. While the oil companies -especially those that conducttransnational activities and are exposed to international opinions-- were intent on developingpolicies and coordinated efforts to respond to the new situation, and the indigenous peoples, inturn, were able to strengthen their organizations to improve their claim on their rights, thegovernment officials of the countries that share this basin had to tackle the emerging problemswith very limited information and resources.In view of this situation, the Latin American Energy Organization (OLADE) and the Oil and GasDivision -together with the World Bank Vice-presidency for Latin America- convened a meetingin 1998 with the object of facilitating the exchange of ideas among governments and to helpthem develop common criteria attempting to improve the environmental and social managementof oil and gas operations in the areas inhabited by indigenous communities. The invitation wasextended to eleven governments * , asking them to appoint senior officials that were acquaintedwith the problem –national coordinators- so that they could begin to know each other and shareexperiences.The first meeting took place in Quito, Ecuador, in July 1998. Two things were observed duringthis meeting: on the one hand the general process taking place in every country could beidentified and, on the other hand, the differences in legislation and national regulations, as wellas the varying policies while addressing problems derived from the social impact of the activitiesof the industry. In this meeting it was decided to conduct a comparative study of the legal,regulatory, contractual and institutional frameworks under which the operations of thehydrocarbon industry take place in the sub-Andean basin. Also in this first meeting a name was adopted for the joint effort: Energy, Environment andPopulation Program (EAP in Spanish).Three tangible and important results were the outcome of the first two meetings of the NationalCoordinators, conducted in the capital city of Ecuador (July and November 1998): (1) toconduct a comparative study of the legal, regulatory and institutional framework under which the *  Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname andVenezuela.  3hydrocarbon activities take place in the sub-Andean basin, (2) to undertake common effortsand a long-term action plan that involves the industry and the indigenous peoples in the questfor solutions to the emerging problems, and (3) to recognize the need for a tripartite dialogue. * Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname andVenezuela. Comparative study of the legal, regulatory, contractual and institutionalframeworks relating to the management of the social impact of oiloperations 1   To perform this task, international consultants were selected. They had access to documentsprovided by the World Bank, to responses provided to a survey circulated among all theNational Coordinators and, especially, to the compilation of laws and regulations related toenergy activities that OLADE had been conducting together with the University of Calgary 2   Short and long-term action plan The second meeting of National Coordinators, held in Quito, produced the following mostimportant recommendations:In the short-term, countries of the sub-Andean basin should:a) Establish a mechanism to provide continuity to the regional cooperation initiative.b) Define the priority activities and create a plan to develop and implement suchactions and to identify opportunities for regional cooperation and exchange of information during the development of the plan.c) Start with initiatives that are important for the majority of participants and that canbe accomplished with resources available, for example, elaboration of standardcontractual clauses and to deal with issues that will be part of a common frameworkor guidelines.d) Study the means for other groups to join in the process (for example, industry,indigenous peoples) and to provide support to National Coordinators.e) Evaluate the potential task of sponsoring groups, including the World Bank andOLADE, and assess whether they should contact other groups and organizations(for example, ARPEL).In the long run, countries of the sub-Andean basin should develop and implement importantregional programs such as the establishment of a database, the elaboration of guidelines andother reference material to control impact in ecologically sensitive areas and territoriesbelonging to indigenous peoples as well as the creation and implementation of regional trainingprograms. The development of long term objectives should be carried out in a sustainable wayto secure the balance between the environment, indigenous populations and the oil and gasindustry. The need for a tripartite dialogue During their second meeting, the National Coordinators acknowledged the need to carry out along-term work plan including representatives from governments, industry and indigenouspeoples’ organizations. This plan should be based on the exchange of information and adialogue that would mainly focus on respecting the interests of each party. The dialogue, inturn, would constitute the basis for a shared program on activities and projects to be jointlydeveloped in the medium and long run.In short, after the two meetings and a series of discussions with the other two most importantactors involved –ARPEL and COICA (Confederation of Indigenous Organizations of the Amazonian Basin)- the EAP Program generated the necessary conditions for the tripartite  4dialogue that allowed them to undertake some activities jointly and with the support of international institutions intent on reaching the same sustainable development goals. Among the various activities, the following was identified:(i) The development of an information system accessible to all participants thatallow for a quick access to documents and works and that, in general, facilitatedialogue;(ii) The harmonization of legal and regulatory frameworks  –not necessarily thesearch for a common regulatory framework but rather the consensus among thethree parties on principles that should guide the improvement of nationalregulatory frameworks;(iii) Planning and implementing a training program to upgrade the level of knowledge of each party vis-à-vis the others and that provides tools to facilitatethe exchange of ideas and make these richer in content As mentioned before, the National Coordinators recognized the importance of producing a workplan that involved government representatives, industry and organizations of indigenouspeoples. Dialogues have been marked with respect for the interests and positions of each oneof the parties. Three important regional meetings of the sub-Andean basin have taken place inthe city of Cartagena, Colombia, in 1999, 2000 and 2001, with the participation of ARPEL andthe local and regional Chambers and companies.In the first of these meetings, held in May 1999, the interests and concerns of the actors wereidentified. These can be summarized as follows: Government ã To see to it that the benefits of social and economic development are equally distributedsecuring respect for the protection of the environment and the social and cultural values of indigenous peoples.   ã To guarantee the participation of indigenous peoples following the precepts and standardsthat have been set at the national and international levels.   Industry ã Before signing a contract or starting with bid processes, there is a need to have relevantsocial information on the area to be explored as well as general guidelines to conduct aconsultative process with local communities.   ã Visible presence of governmental institutions as guides in the consultative process andfollow-up of agreed programs.   ã Definition of regulations to determine the rules of the game.   Local communities ã Secure respect for their traditional cultural values, way of life, territory and their recognitionas an active sector in the country's economy and development.   ã Obtain a compensation for the environmental, cultural and social impact resulting from oilactivities.   ã Compliance with international commitments, especially with Agreement 169 of theInternational Labor Organization (ILO) and its ratification and regulation norms.   Table 1 shows the main interests and concerns identified as a result of developing tripartitedialogues with the different parties involved, during the above-mentioned meeting in Colombia.
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