Seismic Risks: a Criminological Analysis of European Investment Bank Support for the Castor Project
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Seismic Risks: a Criminological Analysis of European Investment Bank Support for the Castor Project Daniel Beizsley1,2
© The Author(s) 2020
Abstract The Castor project was a proposed underground gas storage facility off Spain’s Mediterranean coast financed through a public–private partnership (PPP) between the Spanish state and a consortium led by the Spanish conglomerate Grupo ACS. During the project’s development, cost overruns led to it being refinanced through a bond issuance organized by the European Investment Bank (EIB)—the finance arm of the European Union (EU). On reaching the injection stage, gas escaped violently causing hundreds of small-scale earthquakes resulting in the project’s closure and, as per the terms of the concession, the generation of a €1.3 billion debt for Spanish gas consumers. Using criminological concepts and theory, this article will first explore how the seismic risks that the project posed were excluded from the EIB appraisal process before identifying the causes of the disaster as a product of the “financialization” of infrastructure and investor protection frameworks needed to sustain it.
Introduction The Castor project was a failed attempt to convert an abandoned undersea oil reservoir 22 km off the Spanish Mediterranean coast into a gas storage facility capable of providing additional reserve capacity to act as a buffer for short-term variations in Spain’s gas supply. During the project’s development, it was beset by cost overruns and delays, leading to a default on the bank loans by the promoter to finance its construction. In order to rescue the project, the European Union (EU), through its finance arm the European Investment Bank (EIB), selected the project to be part of the pilot phase for the Project Bonds Initiative (PBI)—a new EU bond-financing instrument designed to attract investment to strategic infrastructure projects across Europe in difficult postcrisis economic conditions. On reaching the injection stage in 2013, gas violently escaped the reservoir, causing hundreds of small-scale earthquakes resulting in the project’s closure. As per the terms of the concession from the Spanish state to the project promoter, the facility was returned to the state triggering a €1.3 billion compensation for the bondholders (including the EIB) to * Daniel Beizsley [email protected] 1
Utrecht University, Utrecht, The Netherlands
2
Eötvös Loránd University, Budapest, Hungary
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D. Beizsley
be financed by increases to Spanish gas consumers’ bills. The bailout of the project caused a scandal across Spain with the public incensed by the Spanish authorities and EU institutions’ mishandling of the project, which saw investors receive financial rewards despite its failure. This article has three objectives. First, in a continuation of the contributions offered by Caneppele and colleagues (2013), Schotter and Rhineberger-Dunn (2013), and Sergi and South (2016), it will identify infrastructure projects as a site worthy of increased criminological attention. S
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