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Environmental Documents
Project number5093
Project nameBRIDAS SAPIC
SectorOil and Gas Production (Includes Development)
DepartmentGbl Infrastructure & Natural Resources
Environmental categoryB
Previous EventsInvested: September 27, 1995
Signed: September 12, 1995
Approved: June 6, 1995

- 1 - April 28, 1995

International Finance Corporation
A Member of the World Bank Group

International Finance Corporation
A Member of the World Bank Group

April 28, 1995

- 3 - April 28, 1995


Environmental Review Summary

1. Bridas SAPIC (the Company) envisages total financial needs of US$221.3 million. The capital expenditure program is focused in the following key areas: (i) the development and recovery enhancement of three gas bearing blocks (offshore and onshore projects in Tierra del Fuego and Aguada Pichana, Neuquen Province) for which gas off-take agreements have been recently concluded (49 percent); (ii) continuing development of other oil and gas properties (36 percent); and (iii) the implementation of a limited exploration program (15 percent). IFC has been requested to provide a US$50 million loan to the Company and an equity investment of US$10 million in Bridas SAPIC’s parent company, Bridas Corporation.

2. This is a category B project according to IFC’s environmental review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of information submitted by the project sponsor and a site visit by IFC’s Technical and Environment Department. The review also included an assessment of the Company’s progress in implementing the Environmental Protection Program (EPP), developed from the Golden Engineering S.A. June, 1993 “Bridas SAPIC: Auditoria Ambiental De Instalaciones Existentes en Lindero Atravesado, Al Sur de la Dorsal, Fernandez Oro, Predra Clavada, El Cordon, Tierra del Fuego” (the environmental audit) which the Company had prepared in conjunction with a previous IFC investment. As well, the review looked at the Company’s compliance with the Government of Argentina’s (GOA) Energy Secretariat’s Resolution 105/92 regarding requirements for reduction in gas venting/flaring, closure of reserve pits, and management of produced water and conducting baseline environmental studies and annual environmental monitoring reports. The following potential environmental, health and safety issues of this project were reviewed:

· gas flaring (venting);
· clean-up of reserve pits;
· produced water;
· status of preparation of environmental impact statement (EIS);
· worker safety and general environmental awareness;
· the environmental performance of Bridas Corporation.

Information on the results of this review is summarized in the paragraphs that follow.

3. As of January 1994, the Company was flaring 7.9 mmscf/day of gas at El Cordon (3.1 mmscf/day) and Tierra del Fuego (4.8 mmscf/day). By January, 1995 gas flaring at El Cordon was reduced to 0.38 mmscf/day and 1.6 mmscf/day at Tierra del Fuego bringing the Company’s total gas flaring down to 1.98 mmscf/day (a reduction of approximately 75 percent). By January 1996, gas flaring at Tierra del Fuego will be reduced further to 0.7 mmscf/day thus reducing the Company’s gas flaring to 1.08 mmscf/day (or an 85 percent reduction in gas flaring compared to January 1994). These steps are in accordance with the GOA Energy Secretariat’s Resolution 105/92.

4. The Company, along with three other Argentine oil producing companies, is participating in a Global Environment Facility (GEF) Project Development Facility (PDF) study which will undertake an initial survey and preliminary analysis of the technical and economic issues involved in gas recovery and reinjection under Argentine conditions. The results of this study will be coordinated with the UNDP/GEF country study on climate change in Argentina. It is expected that the GOA will utilize the conclusions of this study as inputs into the broader assessment of national priorities for reducing greenhouse gas emissions, including possible investment options eligible for GEF funding.

5. The Company’s progress in cleaning its 1,314 reserve pits (removing oil, saline water and oily muds) has been significant. At the outset of the cleaning program, reserve pits were categorized as to the severity of the environmental problem and target dates for clean up were established. As of March 31, 1995, eighty six percent of the pits had been cleaned and sixty five percent had been cleaned and filled. All pits that were categorized as requiring immediate action were cleaned by March 31, 1994. All pits categorized as high risk were cleaned by August 31, 1994 and all middle risk pits were cleaned by March 31, 1995. The remaining pits, which are categorized as having no risk, are scheduled to be cleaned by December 31, 1995.

6. Produced water at Bridas SAPIC’s operations is approximately 40,000 m3/day. As of January 1995, approximately 37,000 m3/day of this produced water was reinjected for secondary recovery projects. Of the remainder (3,000 m3/day), approximately 1,000 m3/day is disposed of in its own wells leaving 2,000 m3/day that needs to be dealt with in an environmental appropriate manner. By January 1996, Bridas SAPIC will dispose of an additional 1,500 m3/day in wells leaving only 500 m3/day of produced water at Al Sur de la Dorsal to be dealt with. Currently, the Company is negotiating with an adjacent operator to jointly dispose of these 500 m3/day and the adjacent operators produced water at their operations. If this option does not materialize, the Company will drill its own disposal well at Al Sur de la Dorsal.

7. The GOA Energy Secretariat’s Resolution 105/92 established requirements for conducting baseline environmental studies and annual environmental monitoring reports. These are intended to provide information as to whether environmental degradation is occurring due to oil and gas activities. In 1994, the Company completed baseline environmental studies for Lindero Atravesado, Al Sur de La Dorsal, Fernandez Oro, Piedra Clavada, El Cordon and Tierra del Fuego (this study includes the offshore and onshore components of Tierra del Fuego). On March 31, 1995, the Company submitted to the GOA Energy Secretariat the first set of annual environmental monitoring reports for these projects. Total, the operator of the Aguada Pichana field in Neuquen Province, has recently completed a baseline environmental study for their project (which the Company is investing in) and is in the process of preparing the first annual environmental monitoring report.

8. Bridas Corporation, in which IFC is making an equity investment, is the parent company of Bridas SAPIC, and also has two operating subsidiaries for which an environmental review was conducted. Polibutenos Argentinos S.A. is the only producer in Argentina of polybutylene, a hydrocarbon polymer. An IFC Environment Division staff member visited the Polibutenos plant site and found the operation to be in compliance with Argentine environmental requirements and World Bank environmental guidelines. Bridas Energy International Ltd. (BEIL) is the international arm of Bridas Corporation and is engaged in oil and gas exploration, development and production outside Argentina. Currently, BEIL is active in Turkmenistan. For the Turkmenistan activities, an environmental audit based on terms of reference prepared by IFC’s Environment Division has been performed by an independent consultant for BEIL. The audit identified a number of relatively minor environmental risks and outlined remediation options to bring the Turkmenistan operations into compliance with World Bank environmental guidelines. BEIL has developed a remediation program for its Turkmenistan operations based on the recommendations in this audit.

9. During 1994, the Company held six safety training courses for its supervisors (Buenos Aires, Tierra del Fuego, Pico Truncado, Tartagal, Neuquen and Mendoza). The course was based on Du Pont’s Safety Training Observation Program (STOP). At the same venues in 1994, the Company made environmental awareness presentations to approximately 8,350 employees, students and local authorities.

10. IFC will ensure ongoing compliance with World Bank environmental, health and safety policies and guidelines during the life of the project by evaluating monitoring reports submitted annually to IFC by the Company and by conducting periodic supervision.

11. Based on its review of available information regarding environmental impacts and proposed mitigation measures, IFC concludes that the Company’s proposed project is designed to comply with the GOA environmental requirements, ESS’s Resolution 105-92 and to meet World Bank environmental, health and safety policies and guidelines.

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