Government faces legal action over new BP pipeline

Opponents of a controversial oil pipeline being built by BP through central Asia warned yesterday that the Government would face legal action if it caused an environmental disaster.

Opponents of a controversial oil pipeline being built by BP through central Asia warned yesterday that the Government would face legal action if it caused an environmental disaster.

Protest groups accused the Export Credit Guarantee Department of failing to make proper checks before agreeing to underwrite a £60m loan to the BTC project being built by a BP-led consortium.

But the deputy head of the ECGD issued a robust defence of the decision, saying it carried out "due diligence" before agreeing to providing cover.

Nick Hildyard, from The Corner House, an environmental pressure group, said the ECGD had never reviewed BP's decision to use an "experimental" process to coat the pipe to prevent it from corrosion. It has since emerged that the pipe has suffered from cracks although the damage has now been repaired. He said: "If these things are not addressed then there will be leaks, people will be harmed and the environment will be harmed and there is a paper trail showing that BP was warned about this. If there's a leak then those responsible should be dragged into court and that includes people in ECGD."

But John Weiss, ECGD's deputy chief executive, told a committee of MPs that the department had carried outdue diligence of the project. He said WorleyParsons, an engineer it commissioned to review the project, concluded in October 2004 it was content with the way the pipeline was being monitored.

David Allwood, the head of ECGD's business principles unit, told MPs the department was aware this was the first time the coating had been used to coat a plastic-covered pipe. But he added: "They have a monitoring system so that if it got to stage where there was potential for a rupture they will intervene." He also told the Trade and Industry Select Committee the ECGD should have consulted businesses before putting in place tough new anti-bribery controls.