Canadian Aid, Honduran Oil
Ottawa funds set to encourage oil investment


Canadian funds are laying the groundwork for controversial oil activity.
ILLUSTRATION: Daniel Rotsztain.

LA CEIBA, HONDURAS—Oil extraction may be on the horizon in Honduras, and
Canadian aid is helping set the stage.

The Canadian Department of Foreign Affairs, Trade and Development
(DFATD) has been financing technical assistance to the hydrocarbon
sector in Honduras as part of a $9.5-million Sustainable Energy Access
project managed by the Latin American Energy Organization (OLADE).
During the first part of the five-year (2012–2017) project originally
approved by the Canadian International Development Agency, OLADE
initiated a review of the regulatory framework in Honduras and examined
the oil and gas potential in the country.

Seismic surveys, studies and drilling over the past 50 years in Honduras
have identified several areas with hydrocarbon potential. They are
mainly located both offshore and inland along the Caribbean coast and
the Moskitia, a remote, primarily Indigenous region in the northeast,
bordering Nicaragua.

The Honduran government has granted a slew of natural resource
concessions in the wake of the June 2009 coup d’état that ousted
President Manuel Zelaya. Some Indigenous organizations have voiced their
flat-out opposition to oil and gas activity, expecting the industry to
further benefit transnational companies at the expense of local communities.

“Right now [resources] are up for grabs and there’s an unparalleled
exploitation of that by transnational and foreign capital,” Miriam
Miranda, General Coordinator of OFRANEH, a federation representing the
46 Indigenous Garifuna communities spread out along Honduras’ Caribbean
coast, told The Dominion. “There’s no respect for international laws and
international jurisprudence on the rights of Indigenous peoples.”

Honduras ratified International Labour Organization Convention No. 169
on the rights of Indigenous and tribal peoples in 1994 and voted in
favour of the United Nations Declaration on the Rights of Indigenous
Peoples in 2007. A report produced by OLADE in 2013 with Canadian
funding outlined Honduras’ obligations under international law and the
importance of free, prior and informed consent. But that same year,
Honduras approved hydrocarbon activity despite no prior consultation
with affected communities.

In April 2013, the Honduran government granted British multinational BG
Group a contract for oil and gas exploration and eventual exploitation
in a 35,000-square-kilometre area off the coast of the Moskitia. Local
residents weren’t consulted until the fall of 2013, months after the
contract was signed.

In February 2011, faced with interest from oil companies and an outdated
law, the Honduran government announced a one-year moratorium on
concessions to allow time for a new hydrocarbon law to be passed. The
contract with BG Group went forward regardless, and the regulatory
framework is now under review by the Canadian-funded OLADE project. BG
Group was issued a renewable four-year environmental license for
exploration on January 17, 2014. Chevron has also expressed interest in
offshore exploration in Honduras.

“By stimulating the economy in these countries and helping them create
an environment conducive to investment, we are contributing to the
well-being of people living in poverty,” DFATD spokesperson Nicolas
Doire wrote in an email to The Dominion.

Stephen Brown, a professor of political science at the University of
Ottawa, is concerned that extractive sector regulatory reviews funded by
Canadian development aid are part of an increasing subordination of
development priorities to Canadian commercial interests.

“When Canada helps revise—or what they call ‘modernize’—regulations,
they present it as being good for the country and therefore good for the
country’s poor,” Brown told The Dominion in a telephone interview.
“There’s a bit of a logical leap there that that will actually happen.”

Brown points to the example of Colombia, where Canadian aid was used to
fund the revision of mining and oil legislation, reducing royalty rates
and weakening environmental protections.

“If we’re helping rewrite codes in the interests of Canadian companies,
then no matter how much you talk about win-win, it doesn’t mean that
it’s true,” said Brown.

Canadian companies are expected to benefit from a new Honduran mining
law enacted in January 2013 after revision by advisors funded by the
Canadian government. A Canada-Honduras Free Trade Agreement was signed
on November 5, 2013.

Sandra Cuffe is a freelance journalist with a penchant for coffee and
geckos. She tweets as @Sandra_Cuffe.