Does It Make Sense to Export Camisea Gas?

With the IDB on the verge this week to make a decision to finance Camisea II, the export phase of the Camisea project, aka Peru LNG, an article in today's El Comercio reports that it could be a grave economic error for Peru to export its gas. According to an analysis by Glen Jenkins of Environmental Defense, at current oil prices, it would be more cost effective for Peru to secure its internal hydrocarbon demand for the next 33 years than to export the gas and have to import fuel in the future. In other words, Peru is paying a high opportunity cost by exporting fuel that it will eventually need.

The Camisea blocks 88 and 56 together contain an estimate 10.9 trillion cubic feet of gas. Of this, 4.2 trillion TCF is destined for export by Peru LNG. The Peruvian Ministry of Energy and Mines calculates Peru's future demand for gas to be 6.6 TCF and a large portion of the energy, industrial, and transportation sectors are making costly conversions to function on gas. The initial contracts for the exploitation of the Camisea gas required that export would be permitted only if domestic demand was permanently assured for a 20-year outlook, however this provision was conveniently changed to a fixed 20-year period (2005-2025) during a renegotiation between the Toledo administration and Pluspetrol. Now the Peruvian government's answer to meeting the future domestic demand for gas is simple if uncertain: discover more.

With over a billion in public financing for Camisea II pending from the IDB, IFC, and ExIm Bank, it is clear that the real beneficiary will be Hunt Oil which controls 50% of Peru LNG. What is less clear is how the project will ultimately benefit the Peruvian economy.

Report of Pipeline Spill in Chillinga, Ayacucho

Peru's Coordinadora Nacional de Radio is reporting a new break in the Camisea pipeline occurring Tuesday morning in the La Mar province of Ayacucho. Authorities from the community of Chillinga, 40 km from the District of San Miguel claim that the rupture has caused the spill of "a large amount of hydrocarbons."

A recent technical audit of the pipeline's integrity was recently completed by the company Germanischer Lloyd, which found that the contract between the government and pipeline consortium, TGP, did not allow for adequate analysis of the terrain and that the pipeline was insufficiently designed and welded. The audit found that proper geological studies would have taken 2-3 years to complete and that TGP dedicated only 2-3 months to this work.

Listen to the Human Rights Hearing on Isolated Peoples

Here's a link to the audio recording of today's hearing at the Inter-American Commission on Human Rights. (The vast majority of the audio is in Spanish.)

The hearing was regarding three petitions submitted to the Commission related to the situation of indigenous peoples in voluntary isolation in Peru – Precautionary Measures 102/07 on the Kugpakori Nahua Nanti and others affected by Block 88 (Camisea Project), 262/05 on the Mashco Piro, Yora and Arahuaca in the Madre de Dios Territorial Reserve, and 129/07 on the Tagaeri, Taromenane and others in the proposed Napo-Tigre Territorial Reserve (Blocks 67 and 39).

Presentations in were made by representatives from organizations that submitted the petitions: AIDESEP (Asociación Interétnica de Desarrollo de la Selva Peruana) and FENAMAD (Federación Nativa de Madre de Diós). The Peruvian government's position was also presented, primarily by a member of the Ministry of Energy and Mines as well as by the head of the pro-oil indigenous organization, CONAP (Confederación de Nacionalidades Amazónicas del Peru).

Link to Audio:
http://www.cidh.org/audiencias/130/pueblos%20indigenas%20aislamiento%20voluntario.mp3

How Not to Contact Isolated Peoples: Repsol and Barrett Take a Page from Camisea

Survival International reports that the oil companies Barrett Resources (US) and Repsol YPF (Spain), have instructed their oil workers to shout through megaphones in the event that they come across uncontacted tribes in the Peruvian Amazon. Both companies have leased exploration blocks in regions where indigenous peoples are living in voluntary isolation. Barrett is operating in Block 67 on the border with Ecuador. Repsol operates the neighboring Block 39 as well as Block 57 in the Lower Urubamba. (It also has an indirect role in Camisea Blocks 88 and 56).

The "Megaphone Policy" for dealing with isolated indigenous peoples is remarkably similar to the Program for Protection and Defense of Voluntarily Isolated Peoples in the Nahua-Kugapari Reserve that was developed for Block 88 by Peru's Technical Coordinating Group for Camisea (GTCI) and the now defunct National Commission of Andean Amazonian and Afroperuvian Peoples (CONAPA). A product of the IDB's $5 million public sector institutional strengthening loan to the Peruvian government, the Program was thoroughly criticized by indigenous peoples' and human rights organizations, although never improved.

The Program, developed in 2003, advocates the use of megaphones, whistles, and flare guns (p. 75) if workers come across native peoples. Even the odd phrases that Barrett Oil workers are instructed to somehow communicate to people who do not understand their language are lifted verbatim from the Camisea Program:

‘How many days (moons or suns) have you walked for?’, ‘We are people just like you’, ‘Is something disturbing you?’ and ‘We haven’t come here to look for women, we have our own women in our own village.’(pp. 88 and 91)

Though severely lacking in advice on such matters as how to deal with a disease epidemic among an immunologically vulnerable population, the Program does not overlook the most obvious question one might ask of indigenous Amazonians who have just stumbled across an uninvited industrial project in their territory: "Is there something bothering you?" -p. 91.

The IDB deserves some blame for accepting this sort of hack contingency planning as satisfying its loan conditions for the Camisea project. Instead of strengthening Peru's policies to protect isolated peoples from contact by oil and gas projects, it has supported the creation of a set of irresponsible standards that are now being adopted by other companies and used as further justification for invading these peoples' lands.

InterAmerican Commission on Human Rights to Hold Hearing on Isolated Peoples in Peru

On August 7, 2007, the InterAmerican Commission on Human Rights (IACHR) of the Organization of American States adopted Precautionary Measure 102-07 requiring the Peruvian government to provide information about its efforts to protect the rights of indigenous peoples in voluntary isolation and initial contact that inhabit the Nahua, Kugapakori, and Nanti Territorial Reserve, affected by the Camisea Project. The IACHR called on Peru to provide information about the activities occurring in Block 88 and their possible impact on the life, personal integrity, health, environment, and culture of the communities within the Territorial Reserve. It also asked the Peruvian government to describe the actions taken to comply with the recommendations of the Reports # 101 and 103 of Peru's Defensoría del Pueblo (ombudsperson's office).

The precautionary measures stem from a petition by AIDESEP for the IACHR to intervene to protect the rights of the indigenous peoples in the Nahua, Kugapakori, and Nanti Territorial Reserve as well as the proposed Napo-Tigre Territorial Reserve in Loreto.

A hearing regarding these measures is scheduled for October 12, 2007 at the IACHR in Washington.
Servindi post (in Spanish)

New Report Finds Camisea Fails IDB and IFC Standards

The September 2007 report, Holding the IDB and IFC to account on Camisea II, is available for download from Amazon Watch. The report, by anthropologist, Tom Griffiths, highlights some of the major environmental and social problems of Camisea I and II and concludes that the Camisea consortium's community engagement in Block 56 has violated international standards on protecting the rights of indigenous peoples and fails to the meet the performance standards of the InterAmerican Development Bank (IDB) and the World Bank’s International Finance Corporation (IFC), both of which currently considering financing Camisea II.

Among the problems with Camisea II outlined in the report are:
1) A flawed and deficient Environmental Impact Assessment (EIA) for operations in Block 56.
2) A community consultation process on the Block 56 EIA that threatened confused and dissatisfied communities into signing their approval.
3) Evidence that prior consent and prior consultation rights were not fully respected by the Ministry of Energy and Mines and Perupetro when it sold exploitation rights to Block 56, questioning the legality of the sale.
4) Failure to address potential impacts of Block 56 exploration and development on isolated indigenous peoples.

The report states that the IDB must delay its decision on financing Camisea II until it first addressed project non-compliance issues with respect to its financing of Camisea I and ensure that ascertain that the project fully complies with IDB policies, including protections for indigenous peoples’ established under ILO Convention 169 and the Inter-American human rights system.

It urges the IFC to include the “associated facilities” of Blocks 56 and 88 in its due diligence; conduct its own social and environmental audit as required under its Performance Standards; and ensure public consultation in Peru and internationally before proceeding with the project.

This is a very good document, in particular for understanding how indigenous communities were railroaded into signing off on the Block 56 EIA in early 2005. Good work, Tom.

Community Members Sickened by Gas in Lower Urubamba

On September 10th the native community Chocoriari and the Tupac Amaru colonist settlement reported cases of community members being sickened by a supposed gas escape at km 12.100 of the Camisea pipeline. Four people were stricken with nausea, vomiting and diarrhea and three were taken away for medical attention. Community members claim that this was cased by a new pipeline spill. TGP responded saying that it was caused by a normal release of one of the pipeline valves. Rafael Guarderas, TGP's Manager of Institutional Relations, instilled confidence with the statement, "It is a small balloon of gas and the valve is several kilometers away. There is a family within 300 meters, but the rest is desolate jungle."
More in Andina and CPN Radio Peru.

Department of Propaganda: Energy Project Saves Rainforest

Earlier this month, the Latin Business Chronicle published an article titled, Peru Energy Project Saves Rainforest, which credits the Camisea Project with saving 1.5 million hectares of Peruvian rainforest. The article, written by the InterAmerican Development Bank's Roger Hamilton, is reprinted from the IDB's own IDBAmerica magazine. In the article, a wide-eyed development-bureaucrat-turned-rainforest-explorer, IDB's Joseph Milewski, points to a map made by CEDIA (Center for Development of Indigenous Amazonians) showing the extensive network of reserves, protected areas, and indigenous territories that CEDIA, the local communities, and other non-governmental organizations fought for years to establish - and takes credit for it all.

The inaccuracies of this article could be written off as lousy journalism if they were not so offensive to the many dedicated people who have literally protested the IDB and the Camisea companies in order to get any protection whatsoever for the Amazon.

Hamilton writes:

Today, largely as the result of Camisea, vast areas have been designated as parks and reserves, giving the indigenous peoples of the Lower Urubamba an unprecedented guarantee that they will be able to make their own decisions on how to safeguard their environment and protect their cultural identity in the years to come.

...a large number of indigenous communities occupy land that has been demarcated and titled, most of which lies along the Urubamba River and its tributaries. Along the river’s main stem, patches of land belong to settlers who also have been granted titles.

In fact, the project has titled a whopping total of zero indigenous territories along the Urubamba River and its tributaries. All of the titling of indigenous communities was done long before the presence of the Camisea consortia and the IDB and was carried out by groups like CEDIA and Comaru with support from Oxfam America and others.

The closest the project has gotten to titling indigenous communities in the region was commissioning a diagnostic study (in which CEDIA participated) of the land tenure along the pipeline route. This was in part because some 150 former TGP workers had invaded the territory of indigenous peoples in the Mantalo River watershed. That study identified at least seven indigenous communities in the Upper Urubamba that needed titling as well as thousands of individual campesino titles that needed to be formalized. So far, 80% of the campesino lands have been addressed, while not a single indigenous community has been titled.

All of the protected areas that the article credits the project with creating: Otishi National Park, the Machiguegna and Ashaninka Communal Reserves, and the Machiguenga Sanctuary, were planned and delineated long before the project. The IDB did give a $5 million institutional strengthening loan to the Peruvian government prior to project financing, but the agency created with this money, the GTCI (Grupo Técnico de Coordinación Interinstitucional), only paid for two consultation workshops during the process of declaring the protected areas. All of the technical work of georeferencing, scientific research, and biological inventories were carried out by NGO's including CEDIA and the Chicago Field Musuem, which together invested 30 times the amount that the IDB contributed to the process.

Hamilton also mentions the Nahua Kugapakori Nanti Reserve for indigenous peoples living in voluntary isolation and claims that the IDB gave it a "solid legal standing and a real measure of protection." In fact, indigenous organizations and activities have long criticized the IDB for financing a project working in this reserve (created in 1990) because of the risk it poses to the lives of indigenous peoples living in voluntary isolation. To assuage critics, the IDB and the Toledo administration quietly passed new legislation in 2005, changing jurisdiction of the reserve (which already existed) and declaring the indigenous residents as wards of the state. Today, the project is in the process of drilling dozens of wells in the Reserve, illegal logging continues unabated, and most of the recently contacted residents are concentrated in settlements along the Camisea River, confined by the project to hunt, gather, and fish in a much reduced territory.

Sadly, the IDB's $5 million investment in the Peruvian government has left virtually nothing to show for itself except for a handful of workshops, weighty "diagnostic" documents, and a shiny, well-outfitted GTCI office in the basement of the Ministry of Energy and Mines. It is no wonder then that their publicists have to instead take credit for the years of struggle and hard work of local communities and organizations. Meanwhile, the project continues to cause damage to the Amazon, its protected areas, and indigenous communities.

Thanks to Lelis Rivera for his comments.
Photo: Ian Gary

Cusco Plans New Roads into the Lower Urubamba, Manu National Park

One of the more frightening side-effects of Camisea is the incursion of new roads into the Lower Urubamba. With the Department of Cusco flush with cash from gas royalties, restricted to investment only in infrastructure, planners are doing what they know best - build roads. And some of those roads will soon open up extremely remote parts of the Amazon, threatening indigenous territories and protected areas with encroachment from settlers and illegal logging.

Until now, the lower Urubamba River watershed has remained relatively protected from these threats because there are no roads into the region and the difficult rapids of the Pongo de Mainique discourage most river traffic. However, this is all changing as roads on both margins of the Urubamba River upstream of the Pongo are pushing closer and closer to the Machiguenga Sanctuary, a protected area established to preserve an area of immense cultural and biological value.

Peru's Ministry of Transportation and Communication recently published a map on its website that shows projects planned in for 2007 in the Department of Cusco. Included in this map is are roads labeled as "en proyecto" (in project) that cut into the Amazon (shown as dashed gray lines on the map). One road passes through the Machiguenga Sanctuary, bypassing the Pongo de Mainique, and then follows the Urubamba River downstream through Machiguenga communities, before turning west through the community of Nuevo Mundo and off through the Machiguenga Communal Reserve and Otishi National Park. Another planned road heads up along the Camisea River where it leaves Machiguenga communities and enters the Nahua-Kugapakori Territorial Reserve for Indigenous Peoples in voluntary isolation and then proceeds on to Manú National Park.

These roads pose a tremendous risk to the lives of the Machiguenga as well as the Nahua, Nanti, and Kirineri peoples who live without contact with outsiders. They will also give loggers and ranchers access to some of the most important natural heritage in the Peruvian Amazon.
(Thanks to LB for this information.)

Congressional Hearing Highlights Environmental Impacts of Camisea

On June 4th, 2007 a hearing was held in the Peruvian Congress on "Camisea Gas and the Development of the Affected Communities. Presenters included the mayors of Pisco and Anco-La Mar as well as Congressional representatives from the regions of Huancavelica and Ayacucho. Wílder Manyavilca, Mayor of the province of Anco-La Mar (Ayacucho) described the damage to forests, contamination of water and medicinal plants, and the loss of agricultural activity caused by the project. He asked for a fund to compensate agriculturalists for the loss of flora and fauna. A recent study estimated that socio-environmental impacts of the project in Anco-La Mar alone were 39,062,885 Nuevo Soles (US$ 12.3 m).

Representatives from Pisco stated that the project had caused environmental damage in Paracas Bay and feared an increase in problems as the fractionation plant is expanded. The demanded a halt to all Camisea II activities. Pluspetrol responded in La Republica that Paracas Bay is not contaminated, citing a monitoring report of ProParacas which found water quality and biodiversity to be within "normal parameters."

Vice Minister of Energy, Pedro Gamio announced that the government had met 70% of its 21 commitments under the IDB Program for Institutional Strengthening and Support for Environmental and Social Management which will end in August.

Article on the hearing in La Republica.

Skanska and Techint Investigated in Bribery Skandal

Argentina's Techint and the Swedish transnational, Skanska, which worked together on the Camisea pipeline and Malvinas plant, are in the center of a money laundering and bribery scandal.

As reported in the Economist, Techint controls another gas pipeline in Argentina, called Transportadora de Gas del Norte (TGN), which the government paid with a trust fund to expand a pipeline carrying gas from Bolivia. Techint awarded contracts to Skanska which was later found to have evaded taxes by obtaining $400,000 in receipts from a shadow company with no employees, called Infinity. An internal Skaska investigation found that the company had paid $4 million to 23 different companies services never rendered. Seven of Skanska's managers in Argentina have been arrested. One politician estimates that $25 m of the $285 m price tag for the pipeline was improperly spent. The investigation into the laundering is looking into the involvement of Argentina's planning minister and has caused a scandal within President's Kirchner's government.

Recordings of conversations between the internal auditor and commercial manager of Skanska in Argentina suggest that the corruption scheme was used in Peru with contracts of up to $1.8 m. Skanska's recent projects in Peru include the engineering and construction of the flowlines in Block 88 and the duct system for the submarine gas terminal in Pisco.

Thousands March to Protest Camisea Plant in Pisco

On June 6th, between 3 and 5 thousand protesters, led by Pisco Mayor, Juan Mendoza Uribe, peacefully marched to Pluspetrol's gas fractionation plant, approximately 10 km south of the city to protest the construction of the plant within the buffer zone of the Paracas National Reserve. According to the Peruvian news, the demonstrators are demanding the revision of the socio-environmental contract signed with the Camisea consortium, which pays the municipality only US$9 million over the project's 40-year lifespan. They are also protesting plans to expand the fractionation plant.

In May, the Pisco municipal government appealed the Environmental Impact Assessment for the expansion of the plant, citing irregularities. According to the mayor, "There are defects and legal and technical voids (in the environmental impact study). Furthermore there is no compensation considered for any contamination and ecological damage (that could occur) in the Paracas National Reserve. CPN Radio

Cusco Government Declares State of Emergency in Kumpirishiato

On June 5, 2007, the Natural Resources Bureau of the Cusco regional government declared a State of Emergency for the Kumpirishiato watershed because of the spills from the Camisea pipeline. Kumpirishiato is the site of the pipeline's most recent spill on April 2, 2007 at km 125. According to a government official, the measure was taken to draw the attention of the federal government in order to address the urgent ecological crisis in the area. On June 12, a Cusco government commission, headed by Regional President, Hugo Gonzáles Sayán will visit the affected region. Cusco government official, Abel Caballero Osorio, cited in an article on the website of the Coordinadora National de Radio, raised concerns that TGP was violating Peruvian law by pumping 120,000 barrels of gas per day, exceeding the limit of 37,000 barrels.

Camisea Protesters Block Road to Quillabamba, Threaten to Take Over Pipeline

Protesters in the province of La Convención have launched an indefinite blockade of the road between the provincial capital of Quillabamba and Cusco, closing access to the town and leaving scores of vehicles stranded. All businesses and public institutions in the Province are closed due the marching of thousands of protesters, led by the provincial mayor and nine district mayors, who are demanding accountability for the pipeline's six spills and benefits for the local population.

On Tuesday, May 22, more than 1,500 residents of Kiteni and Kepashiato peacefully marched to a pumping station at km 125 of the Camisea pipeline, the location of the latest spill, where they were encountered by police and TGP's private security. Community members presented a document to the company, demanding that it pay damages for the spills and that Peru's Energy Minister, Juan Valdivia, visit the region.

The protest was originally planned to last 72 hours, but on May 23, organizers decided to extend the blockade indefinitely until the federal government sends ministers to the region. They also said that they were prepared to take over the pipeline and block access to the tourist destination, Machu Picchu, if the government did not respond.

In addition to demanding accountability for the pipeline spills, protesters are calling for the construction of a pipeline connecting the gas reserves to Quillabamba, the improvement of roads in the region, and the declaration of a state of emergency in the Convention.

More in: La Republica, Andina

Using Google Earth to See Pipeline Erosion

If you use the free GIS program, Google Earth, you can get a good aerial view of the pipeline right-of-way and the tremendous erosion caused by construction.

Just copy and paste the following sets of lat,long coordinates into the Google Earth search field (one at a time):

12°14'15.13"S, 73° 0'36.96"W

12°12'32.64"S, 73° 0'27.60"W

The above sites are both in the Machiguenga Communal Reserve. The aerial images are from May 2004. Some terracing/erosion control are visible but there are also some blowouts into the watersheds on the side. These images demonstrate how the strategy of building the pipeline along ridgelines affected watersheds on both sides of the divide.

In 2003, I visited the region during pipeline construction with Environmental Defense and Global Village Engineers (GVE). The following is from GVE's report:

In the steepest areas of construction observed there was little, if any attempt at environmentally sound construction. Over the entire portion of pipeline corridor observed (approximately 60 km), during construction there was total clearing of vegetation and topsoil to a depth of approximately 0.5 meters during the 2002 dry season. According to reports from local people, and supported by the absence of any protected stockpiles of such material, the cleared material was stockpiled along the corridor. However, there is currently little or none of this material remaining adjacent to the corridor. Thus, the removed vegetation and soil most likely washed into the nearest watercourse. In addition the construction left soils exposed during the ensuing rainy season and in some areas over two meters of the exposed soils were eroded and washed into the nearest watercourse. The net result of erosion and clearing was washing up to 100 tons of soil and vegetation per meter of pipeline into sensitive aquatic habitat.

It is hard to imagine this not being one of the causes for the dramatic decline in fish stocks reported by Machiguenga communities along the pipeline ROW.

Here are a few other coordinates to check out in Google Earth.

Las Malvinas camp and facility:
11°50'26.07"S, 72°56'49.64"W

Where the Camisea pipeline crosses under the Urubamba River:
11°56'47.85"S, 72°55'27.11"W

Pagoreni Well Platform - Block 56 and road (in the Machiguenga community of Shivankoreni):
11°42'54.59"S, 72°54'1.85"W

Machiguenga Community of Shivankoreni (village center)
11°42'41.38"S, 72°55'43.79"W

Pagoreni B Well Platform - Block 56
11°41'28.45"S, 72°56'56.96"W

San Martin 3 Well Platform (I believe) - Block 88
11°47'8.71"S, 72°42'5.02"W

I'll try to keep posting other coordinates of places of interest in the future.

More on 6th Pipeline Spill

A segment on the program Reporte Semanal on Chanel 2 covers the latest spill, visiting the place where it occurred in Kepashiato. According to TGP, the latest spill amounted to 36 gallons, while the regional government has reported a loss of 4,000 barrels. The reporter visited colonist and Machiguenga communities where there found that people do not know what to do in the case of a pipeline spill. He also interviewed community members who reported that fish stocks have virtually disappeared since the project began, a claim that TGP denies. Bill Powers, an engineer with E-Tech International was also interviewed in the segment in which he voices serious concerns with the quality of the pipeline welds, stating that the 1st and 2nd pipeline ruptures were weld-related, the 3rd caused by soil movement, and the data on the 4th and 5th spills has not yet been released by OSINERG. TGP maintains that none of the spills were the result of improper welding or poor quality pipe.
Video of the segment (in Spanish).


An article on the new spill in Caretas, describes a tense situation in the community of Kepashiato, in which TGP snuck the damaged piece of pipe away to Lima in a helicopter, despite the protests of community members demanding an investigation.

USAID Report to Congress Links PeruLNG to Camisea I

A report obtained by Oxfam America through the Freedom of Information Act submitted by USAID to Congress reveals that agency's concerns with the Camisea Natural Gas Project and links it directly to the development of PeruLNG aka Camisea II.

USAID must report on the project because US tax dollars contributed to the $75 million IDB loan granted to the downstream (pipeline) portion of the project.

Under the Pelosi Amendment (Section 1307 (a)(1) of the International Development and Finance Act of 1989), the EIA (Environmental Impact Assessment) for the fractionation plant and marine terminal were not completed and publicly available 120 days before the IDB's vote, thus USAID recommended to the Secretary of Treasury and US Executive Director on the IDB Board "not to vote in favor of the proposed Camisea Natural Gas Project."

USAID's analysis, "revealed substantial adverse environmental and social impacts involving biodiversity and indigenous peoples that needed to be remedied." It also found that not all of the IDB's loan conditions regarding environmental and social commitments of the project were fulfilled prior to financial closure on the loan.

The report describes the LNG export component of the project as including the construction and operation of an LNG liquefaction facility and marine export terminal in Pampa Melchorita on the coast, a 408 km, 34" diameter, pipeline extending from Chinquintirca, Ayacucho to the coastal plant (we now know that this new pipeline will most likely extend all the way to the Lower Urubamba in the Amazon), and the development of new gas wells in Block 56, adjacent to the Block 88. Six (or more?) wells are planned to tap the Pagoreni Reserves of 3.5 trillion cubic feet of gas in Block 56.

The proposed financing of the LNG export component is the following: $700 million from Export Credit Agencies, $400 million "A" loan and $400 million "B" loan from the IDB (the IDB signed a mandate letter in July 2006 formally beginning the project appraisal process), and $300 million from local capital markets. Project sponsors will contribute $1.6 billion.

According to its report to Congress, "USAID considers the LNG project as an expansion of the Camisea Natural Gas Project." This means that in considering loans to PeruLNG, the US government will revisit the environmental and social concerns raised in the first IDB Camisea loan and evaluate fulfillment of the conditions of that loan (something that the IDB has not done since June 2004).

Under the Pelosi Amendment, the US government's environmental assessment of the project must include associated and cumulative impacts, in this case the existing Camisea project including the pipeline and activities in Block 88.

Brief: IFC to Consider Financing Camisea II

Sources recently reported that the Policy Committee of the International Finance Corporation, the private sector arm of the World Bank, has given the lender a green-light to consider financing Hunt Oil for Peru LNG or Camisea II. The IFC has a performance standard on indigenous peoples. The upcoming project approval process should be interesting to watch.

Defensoria del Pueblo: Perupetro Must Coordinate with INRENA and INDEPA on New Blocks

A March 20, 2007 report by the office of Peru's Public Ombudsperson (Defensoria del Pueblo) analyzes the overlap of Peru's 18 new hydrocarbon exploration concessions with Natural Protected Areas, Protected Area Buffer Zones, Reserve Zones (a transitional protection status), and existing and proposed Territorial Reserves for indigenous peoples living in voluntary isolation. The report cites date from civil society organizations that one Block, 131 overlaps with a protected area (El Sira Communal Reserve); six blocks (130, 131, 132, 133, 134, 136, and 140) overlap buffer zones; four of the blocks (135, 137, 138, and 139) overlap the Sierra del Divisor Reserve Zone; four blocks (132, 133, 138, and 139) overlap Territorial Reserves for indigenous peoples living in voluntary isolation; and four blocks (135, 136, 137, and 139) overlap proposed Territorial Reserves.

The report found considerable disagreement between the Ministry of Energy and Mines (MEM), Perupetro - the state company that promotes hydrocarbon exploration - and Peru's natural resource agency (INRENA) in their interpretation of the law. MEM and Perupetro claim that INRENA only needs to be consulted when the contracting company submits an Environmental Impact Study (EIS) for exploration in the protected area, but does not need to be involved in the designation of hydrocarbon exploration blocks. The Defensoria's report concludes that the government must obtain a technical opinion from INRENA before it auctions off blocks in protected areas and that INDEPA should be consulted on blocks that overlap with Territorial Reserves for isolated peoples.

In an interview on "Mesa Central" on Chanel 7, Perupetro President, Daniel Saba (pictured), tried to discredit the Ombudsperson's report, questioning the organization's motives. He claimed that INRENA's only role in the process of hydrocarbon development in protected areas was to review the EIS submitted by the company and then went on to deny the existence of indigenous peoples living in voluntary isolation in the Peruvian Amazon. Saba dismissed evidence of the existence of isolated peoples saying that it was invented by an anthropologist who now works at the World Bank. (Ironically, the person in question, Alonso Zarzar, was head of community relations in the 1990's for Shell in Camisea and spent much of his time trying to disprove the existence of isolated peoples in the Nahua-Kugapakori Territorial Reserve in order to justify Shell's drilling there.) Saba then announced that Perupetro would do its own study to show that isolated peoples do not exist.

Link to the interview with Perupetro's Daniel Saba.
Related: Peru's New Petroleum Concession Map Covers Most of Amazon

Pipeline Suffers 6th Rupture

On April 3, 2007, TGP reported to the press that it had detected an "anomaly" in the liquid gas pipeline at kilometer 125 in the community of Kepashiato in the Cumpirishiato Valley. The company categorized the situation as "under control" saying that it was only a "bubble" (burbujeo) and that it had caused no environmental or social damage.

However according to the Associated Press, a technical commission from the regional government in Cusco visited the area on April 6th and found that a spill had indeed occurred. The commission accused TGP of downplaying the incident. It found and estimated 4,000 barrels of gas had leaked into the surrounding soil and streams in a radius of 300 meters, directly affecting at least 200 families. The local population asked for the government to declare a state of emergency.

The spill was only 500 meters from where the pipeline broke in March 2006, causing explosions and setting a home on fire. According the to the technical commission's report, It occurred on April 2, 2007 at approximately 2:00 pm but TGP did not alert residents living only 10 minutes away until the following day.

In an article published by La Republica, Peru's College of Engineers accused TGP and the Ministry of Energy and Mines of not telling the truth and putting the country's energy matrix at risk by not stopping production and making long-term fixes to the leaky pipe.

NACLA: The Camisea Cover-Up

Kelly Hearn, writing for the North American Congress on Latin America, provides a detailed account of the concerns about the integrity of the Camisea pipeline as first reported by the NGO, E-Tech. E-Tech's initial report was issued in early 2006, only a week before a pipeline explosion occurred in Echarate.

Hearn interviewed an anonymous inspector, "Andrés" who showed him a copy of an inspection report issued by Gulf Interstate Engineering, declaring one of the welding teams unfit.

Andrés emphasized that Techint had been unprepared for the jungle terrain, since it had failed to carry out a geotechnical study of the pipeline route. He said the company used a route proposed by Shell Oil when it was contending for rights to Camisea. “TGP took Shell’s plan and modified it without even inspecting the route from the ground. They only flew over in a helicopter,” he said. Héctor Gallegos, president of the Peruvian College of Engineering, agreed that Techint had failed to gather geotechnical data. “In engineering there is a basic probability equation for the design and construction of a work, which is ‘Danger times vulnerability equals risk,’” Gallegos said. “In this case, the danger—the geology and soil—was not known, so it was impossible for them to fix the vulnerability.”

The article goes on to report irregularities in the process by which Peru's Ministry of Energy and Mines selected a private firm to carry out a technical audit of the pipeline. The contract went to the Mexican subsidiary of the German company Germanischer Lloyd which offered to do the audit for $1.9 million, far less than the next lowest bid of $6 million. One engineer involved in a competing bid said, “I have talked to others involved in the bid, and we agree that the job cannot be done for that amount.” On theory is that Techint paid Germanischer Lloyd - Mexico to underbid in order to secure the contract and conduct a forgiving audit. Peru's College of Engineers also suspects foul play and published a letter to the Ministry of Energy and Mines in October 2006, asking that the audit be suspended.

Other concerns about the pipeline raised in the article are that the pipeline was too thin for the steep terrain and further that Techint may be running the pressure too high, beyond test levels.

Much more in the The Camisea Cover-Up

Malvinas: Corners Cut in Corrosion Prevention

In a piece called "Camisea: complicidades y negligencias," reporter, Herbert Mujica Rojas, brings to light Report No. 080-2005-CR/JVR from May 2005, to Peru's Congressional Committee for Fiscalización y Contraloría. The commission found evidence that the consortium Sade Skanska Latintecna JJC (today known as Skanska Peru) did not comply with technical specifications for corrosion prevention in the high temperature pipelines for the Camisea Gas Project and that this was known by Plus Petrol. OSINERG aknowledged the claim made by Skanska subcontractor, Eldaco SAC, the company hired to carry-out Cathodic protection of the high temperature pipelines in Las Malvinas.

The Commission report concludes that OSINERG knew this when it issued a report distorting and hiding the truth by referring to out-of-date Technical Standards when it said that it had detected no violations with respect to the security of the installations. It also accuses the Director General for Hydrocarbons and the Ministry of Energy and Mines of negligence in making claims about the project that contradicted the evidence.

Apparently, Skanska was responsible for building the Malvinas plant, where the gas from the San Martin and Pagoreni gas fields are collected, separated, and sent through the pipeline. Malvinas has the capacity to process 440 million cubic feet of natural gas and 30 thousand barrels of gas condensate each day. Skanska subcontracted Eldaco to apply cathodic protection to pipes that handle high temperature gas (>600ºC). The technical specifications of the treatment were to apply one layer of inorganic zinc and a second layer of silicone to the pipes, both necessary to prevent premature corrosion of the pipes and explosion of the volatile contents. Eldaco claims that Skanska, running behind in completion of the plant, cut corners and ordered the subcontractor to only apply the zinc coating, thus violating project specs. An Eldaco manager provides an account of this in the comments of this article in Servindi.

Camisea II: Hunt Oil May Build Second Pipeline in Amazon

Since October, we have been hearing diverse accounts that Peru LNG - the consortium led by Hunt Oil (US) and including SK Corporation (South Korea) and Repsol YPF (Spain) is considering building a second pipeline originating from the Las Malvinas facility in the Lower Urubamba region to feed its LNG plant in Pampa Melchorita with gas from Block 56. According to the Peru LNG's website, and the InterAmerican Development Bank (IDB), which is considering financing the project, the second pipeline was supposed to be built only from the coast to the edge of the jungle in Ayacucho. The reasoning has always been that constructing a new pipeline in the Amazon jungle would cause additional environmental damage to an extremely sensitive region. The original Camisea gas pipeline was supposedly sized large enough in anticipation of the additional gas from Block 56.

Now, however, Hunt is looking seriously at the possibility of constructing a second pipeline in the Amazon. Peru's Ministry of Energy and Mines (MEM) and its natural resource agency (INRENA) held consultations with local organizations in Quillabamba in November about the proposed second pipeline. In late November, a senior official with MEM told me that a second pipeline in the Amazon was in the planning and that it was needed because Peru's internal demand for gas has far exceeded expectations. This argument does not make much sense because the new pipeline would be build by Peru LNG to feed their LNG export facility. Besides, according to El Comercio, Camisea operator, Pluspetrol has not managed to offer gas at a price that has been attractive to industry. In a recent interview with Reuters, PeruPetro President, Cesar Gutierrez said, "The conversion to gas in industry has been limited and the conversion for domestic use is almost nil."

A more likely reason why Hunt is looking into the second pipeline is that Peru LNG could not come to agreement with TGP over the cost of transporting gas through the existing pipeline. Quality concerns with the pipeline may be another factor.

In December, I spoke with Lelis Rivera, Director of CEDIA, who has worked in the Upper and Lower Urubamba for three decades. He predicts that a second pipeline in the Amazon could not be routed alongside the existing liquid and gas pipelines. The existing pipelines were built along steep ridgelines and subsequent erosion has left little room to add another pipe. In some places, erosion of the ridgeline has been so bad that it has exposed the pipeline.

If Hunt does decide to build a second pipeline in the Amazon, the impacts on indigenous communities and the ecosystem will be as extreme. In a 2003 report on the construction of the first pipeline, Global Village Engineers Global Village Engineers estimated that the clearing and exposure of the right-of-way in the Amazon caused as much as 100 tons of soil and vegetation per meter of pipeline eroding into sensitive aquatic habitat. This left local indigenous communities without clean water or fish to eat.

The Camisea Chronicles

Check out Indian Country Today's recent three-part series on the Camisea Project. Reporter Lisa Garrigues visited communities in the Upper and Lower Urubamba as well as Quillabamba and reports on the conditions in the Machiguenga, Yine, and Quechua communities.

Garrigues offers an in-depth report on the changes in health, nutrition and culture in indigenous communities since the project began.

Here's a taste from the first installment on December 18, 2006:

Dr. Meliton Concha, director of indigenous health for the Quillabamba region, attributed the deterioration of Machiguenga health directly to dietary changes brought on by gas company activities. ''Before, there were fish and birds in abundance. Now the rivers are impoverished.''

Ciro Miranda, of the nongovernmental organization CEDIA, said the money negotiated in river access deals with Pluspetrol for three-year river exploration rights, which can range from $10,000 to $89,000, is minimal for the needs of the communities. Pluspetrol requires that the community present a project to them before they will disburse the funds. The projects don't always immediately alleviate malnutrition.

The series discusses some of the cultural impacts on the Machiguenga communities:

The buzz of helicopters, the churning waters of transport boats, the gas leaks that caused fish to die and skin to burn have been continual reminders in this territory that was once exclusive to the Machiguenga and other peoples.

Part 2 mentions health problems that have intensified since the project began including respiratory disease, diarrhea and syphilis.

In Part 3 of the series, Garrigues writes about what the government and companies have done to silence public criticism of the project including: cutting the budget of the Defensoria del Pueblo and thus forcing it to close it's office in Quillabamba; paying off media to slant coverage of the project; and shutting down a local television station that ran an investigative story about the project.

Photo by Adam M. Goldstein

E-Tech Questions TGP's Latest Pipeline Report

Peru's news daily, La Primera, has an interview with E-Tech International engineer, Bill Powers who shares his skepticism of TGP's latest report on the status of the Camisea Pipeline. He accuses TGP of placing the blame for multiple pipeline spills on mother nature while having not taken the time to adequately control erosion during pipeline construction. He also says that TGP's "intelligent pigging" tests are not capable of detecting the fundamental problem of substandard welding - a problem that requires radiography to identify.

Power's also questioned how the firm Germanisher Lloyd, which has been contracted by the Peruvian government to perform a technical audit of the pipeline, would be able to carry out a proper field assessment during the height of the rainy season in the Amazon.

Rigzone reports that TGP will invest an additional $85 million in the pipeline in 2007. It quotes TGP General Manager, Ricardo Ferreiro, as saying that "The pipeline is in perfect condition" and that their testing has found only 30 small scratches or dents in the pipeline.

Peru's New Petroleum Concession Map Covers Most of Amazon

Perupetro SA, Peru's state company responsible for promoting hydrocarbon exploration and development recently released a new map showing existing and planned concession blocks. The new map shows a number of new areas of the Peruvian Amazon now open for oil and gas exploration including the Sierra del Divisor Reserve Zone that borders Brazil. The portion of Peru's 67 million hectares of Amazon rainforest that is slated for oil exploration now exceeds the 50% reported on December 4, 2006 by the Environmental News Service.

According to Rigzone, Perupetro signed a record 16 contracts with private companies for oil and gas exploration and exploitation in 2006 and is putting another 18 on the auction block in 2007, which it will promote in at a roadshow in Houston this month.