Cyprus Mail

Rules ‘ignored’ for oilfield behemoths

The Schlumberger facilities under construction

By Elias Hazou

IN A scramble to bring forward the operations of oilfield services behemoths Halliburton and Schlumberger in Aradippou, authorities here seem to have rewritten or even tossed out the rulebook, bending and sometimes outright sidestepping regulations.

The two companies have picked Cyprus for their base of operations in the east Mediterranean. At this stage, they will be working with ENI-KOGAS, currently drilling an exploratory gas well in offshore Block 9.

Halliburton won the contract for drilling, cementing and completion of the ENI wells. Schlumberger’s contract with ENI involves carrying out logging and testing. Some of its logging tools use radioactive sources. Schlumberger also needs storage space for shape charges.

Both companies’ massive facilities are located just off the Kalo Chorio roundabout, 5.5km from Larnaca airport and 7.5km from Larnaca port. The nearest residences are about 1km away. Locals are furious and apprehensive over the lack of public information about the project. Meantime they have filed a complaint to the Ombudsman, and have started an online petition demanding the facilities be removed from the designated area.

On October 23 opposition politicians kicked up a storm at the House plenum when it emerged that Aradippou municipality had granted Halliburton and Schlumberger building permits just two days before a new bill was passed concerning environmental studies for such facilities.

The municipality’s move blew out of the water a tacit deal that no such action would be taken prior to voting on a bill submitted by Greens MP George Perdikis, mandating extra environmental regulations for hydrocarbons-related activities on terra firma.

The following day Aradippou mayor Evangelos Evangelides defended the municipality’s action, insisting that all had been done by the book, and blamed MPs for the muddle.

Speaking on a radio show, Evangelides argued that, since all involved government agencies- town planning, labour inspection – had given the project the nod, his municipality had no choice but to go along.

According to the mayor, Schlumberger was above board in obtaining all the relevant permits. In contrast, he offered, the other company (Halliburton) started construction on its facility without first having secured a building permit.

“The company itself (Halliburton) admitted to this,” said Evangelides.

“Speaking on the record in parliament, the company said it was being encouraged by all the state departments to press ahead because, as it was told again and again, this was a national exigency.”

This episode has been confirmed to the Sunday Mail by a person present at that session of the House environment committee.

When pressed by an MP, the Cypriot contractor hired by Halliburton admitted that they had started building without a permit. Then, to justify this, he blurted out: “So what, half of Cyprus is doing it.”

According to the same source, a Halliburton rep seated nearby looked jaw-dropped on hearing this.

Evanthia Savva, an Aradippou municipal councillor (AKEL), one of the few who voted against the motion to grant the building permits, presented a vastly different analysis to the mayor’s.

Speaking to the media, Savva was adamant that from the outset all procedures followed were illegal or irregular.

For starters, she said, construction began before building permits were issued, and the law clearly prohibits this, with no exceptions.

The Halliburton operation
The Halliburton operation

Savva explained that the facilities in question are located in an area designated for light industry. But the operations of the two companies consist of heavy industrial activity.

Recognising this, she said, the town planning department asked the Cabinet to approve a town planning authorisation by way of deviation from the Larnaca master plan. The Cabinet was asked because the project is on government land. It okayed the authorisation. However, permits or authorisations by way of deviation concern public projects alone – clearly not the case here.

“Are these two companies state corporations? Or are we to believe that they have become state companies by virtue of the fact their premises lie on government land?” the councillor jibed.

Moreover Savva rubbished the mayor’s contention that the municipality’s hands were tied because all the government departments were sanctioning the project.

Where an illegality is noted, she said, a municipality can take recourse to the Supreme Court and ask for the revocation of a town planning permit. But Aradippou municipality did not do this.

What’s more, Savva rejected the notion that all was well when it came to Schlumberger, as the mayor was claiming.

What happened was that a company by the name of Giesel had earlier applied to build a photovoltaic systems manufacturing plant at the same location. Giesel subsequently agreed with Schlumberger to sub-lease the building to them.

Since Schlumberger’s operations were different, this in turn required applying for a change of use on the facility. In January this year the mayor, apparently acting on his own, authorised the change of use without consulting the municipal council.

The application for change of use was filed on January 7. It was approved in record time – two days later.

As a result, said Savva, the town planning department understood the mayor’s endorsement as being the final word from the municipality, and it proceeded to issue a town planning permit for Schlumberger.

Citing the relevant law, Savva said permits do not have retroactive effect.

“You can’t legalise an illegality after the fact,” she noted.

And in a loaded remark, Savva asked why the municipality had met to decide on the building permits on a Tuesday (October 21) when usually it convenes on Thursdays.

To clued-in residents, there was a method to the madness: authorities were fudging the rules to deliver a fait accompli. As sources explained to the Sunday Mail, granting a town planning permit by way of deviation does not require public consultation with the affected communities. But a permit by way of derogation – the procedure that ought to have been followed – does.

Thus, sources say, authorities read the law in such a way as to deliberately dodge public hearings.

Some might dismiss this as nitpicking, particularly when an investment of this magnitude is at stake. It’s no secret that for the average Joe getting a building permit is a red-tape nightmare, which is why many resort to building their homes and premises illegally. And the government often looks the other way.

But in this instance it appears authorities at all levels – local and national – went to the other extreme, displaying an ad hoc approach to the law and bending over backwards to indulge Schlumberger and Halliburton. It’s fair to say they pulled a fast one.

Elena Kalli, one concerned local, is baffled by officialdom’s conduct.

“Neither Halliburton nor Schlumberger would mind forking out a few more thousand euro to pay for an environmental impact study or to comply with additional regulations, in fact they might even welcome it,” she told the Sunday Mail.

“You get the sense that somewhere down the line the companies got caught up in the whole thing, they went along with it, and of course they weren’t about to blow the whistle with authorities going out of their way to ensure the operations begin with minimal resistance.”

Leaving it to the last minute, in mid-August Aradippou municipality finally moved to commission two environmental impact assessment reports for the facilities.

On August 8, Aradippou’s municipal council had decided unanimously to invite tenders for environmental reports. But five days later, August 13, that decision was reversed, with the municipality opting to go for no-bid contracts – again in apparent breach of regulations.

It’s understood that between those two dates a meeting had taken place between a delegation of the municipality and energy minister Giorgos Lakkotrypis. The Sunday Mail understands also that ENI’s drillship was at the time en route to Cyprus from Mozambique.

The municipality awarded two no-bid contracts, one to the University of Cyprus (UCY), the other to the Cyprus University Of Technology (TEPAK).

The UCY report is signed off by one person alone, Panos Papanastasiou, who happens to have worked as a consultant for Schlumberger for a number of years.

Dated September 8, this report was completed in under a month after its commissioning by Aradippou municipality. In all, it cites just six references, three of which are links to the websites of Schlumberger and Halliburton.

The Saipem 10000
The Saipem 10000

By comparison the TEPAK report (dated September 25) is more detailed and exhaustive. Seven people were on the team, including environmental scientists, engineers and chemists. Unlike the former, this report did bother to take on-site air pollution readings, but these were taken before the facilities went fully operational, which seemed to defeat the purpose.

Both reports – which the Sunday Mail has seen – found that no significant air or noise pollution would arise from the two companies’ operations. TEPAK assessed the various parameters as follows: medium risk, within acceptable bounds, from atmospheric emissions, low risk from solid and liquid waste seeping into the ground or waterbed; low risk from storage of explosives; and low risk from radiation.

The companies had furnished authorities with detailed documentation pledging to take all safety precautions in line with international standards: for example the shape charges are to be stored separately from the detonators, and the radioactive sources (used for measurements during offshore drilling) will be stored in thick stainless steel containers and shipped abroad once expended.

Though the companies do have the wherewithal to police their own activities – and it’s in their best interest to ensure nothing goes wrong – who will check them?

As critics point out, Cyprus lacks a radioactive materials management unit, and moreover the labour inspection department has formulated no action plan for handling radioactive waste products. Despite this, the same department rubberstamped the permits.

The environmental reports themselves include a caveat: the associated risks are low, they concur, provided however that the two corporations make good on their assurances to enforce all safety measures.

Neither report mentions Halliburton’s involvement in the 2010 Gulf of Mexico oil spill.

Few would disagree that the presence here of these multinationals is a big deal, with possible ramifications beyond monetary and job creation. At a bare minimum, the criticism is this: if the state had to warp its own rules to ensure the facilities were up and running within a reasonable time-frame, what does that say about the system?

Moreover, given the skulduggery on the part of the authorities, how can you now ever convince sceptical locals that the operations are safe – which they may well be.

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