PERU’S CAMISEA GAS PROJECT: ONE YEAR LATER

Indigenous, Campesinos and Civil Society Stand Up to Pipeline Politics

by Yeidy Rosa

The Camisea gas extraction and pipeline project—extolled by the government of Peru, the companies building it, and the banks financing it, as an important contribution to Peru’s economic development, creating jobs and significantly increasing the country’s standard of living—is starting to appear more like the social and ecological disaster that civil society and environmental groups had warned of. And this after only one year of operations.

On Sept. 17, massive ruptures along the Camisea pipeline caused the evacuation of the Andean town of Toccate in Ayacucho region, reported the Lima daily El Comercio. Three hundred cubic meters, or 4,000 barrels, of natural gas liquids spilled into the soil and water of Toccate—an area considered to be one of three where the year-old pipeline is in danger of collapsing. It was the second spill near Toccate, in Ayacucho’s La Mar province, in two weeks. Omar Quezada, regional president of Ayacucho, told Reuters on Sept. 23 that Ayacucho would in fact seek legal action, on both penal and civil counts, to ensure reparations for the environmental and health hazards inflicted upon the residents of the region by the construction and operation of the project.

This has been the third Camisea gas spill since December 2004 along the pipeline, operated for an international consortium by Transportadora de Gas del Peru (TGP), in turn controlled by Techint of Argentina. On December 22, 2004, a major spill at kilometer eight of the Camisea pipeline leaked liquid natural gas into Kemariato Ravine, near the gasfields in the Peruvian Amazon.

Toccate is also the site where, in June 2003, 71 employees of the Techint Group were kidnapped by a group of armed individuals who President Alejandro Toledo termed as “remnants” of Sendero Luminoso (Shining Path), reported the BBC on June 11, 2003. Peru’s La Republica reported on June 16, 2003, that ex-hostages indicated that the kidnappers called themselves “Nuevo Sendero,” a group fighting for social justice. The group’s demands included food, antibiotics, and that jobs are given to local residents rather than Argentines, with equal pay and benefits as foreign workers. John Ferriter, a spokesperson from the office of external relations of the Inter-American Development Bank (IADB), the project’s main financer, states: “We are concerned about the spill and are closely monitoring the situation and are awaiting a full report from company and Peruvian authorities. We are confident the necessary measures will be taken to enhance pipeline security and safety and will work with the company and the Peruvian authorities to assist in carrying out such measures. The primary responsibility for pipeline security, as with construction of the pipeline, rests with the project company, Transportada de Gas del Perú (TGP). However, the IDB is committed to monitoring and evaluation as well as providing assistance in all aspects of the project.”

Nadia Martinez from the Institute of Policy Studies takes a harsher view: “The spills that have occurred demonstrate the lack of planning and attention dedicated by the operating companies in order to minimize the impacts of the project. It is not surprising that after so many problems in the stages of construction with erosion and other technical problems, that the companies are not prepared to handle this kind of disaster.” Martinez, who works with Peruvian civil society groups monitoring the Camisea project, charges that a worker was killed in the December 2004 blast on the pipeline—a fact which has never been officially acknowledged.

The Camisea Gas Project was heralded under the official slogan “Something Good is Arriving” in the summer 2004, as gas from the Camisea Basin in the Peruvian Amazon began to arrive at the Pacific coast near Lima via parallel trans-Andean pipelines. The IADB’s abstract on the (to date) $2.7 billion project hails it as in the host country’s “national interest,” saying it is “expected to greatly contribute to the economic development of Peru.” The Peruvian government says it will add a projected 0.8% to the county’s GDP growth for each year of the 33-year concession. Moreover, the pipeline is predicted to save Peru $4 billion in energy costs over the life of the project, and to earn it billions more in export earnings.

Yet, an independent monitoring report—drawn up by the local Machiguenga Council of the Urubamba River (COMARU) with Amazon Watch and the Amazon Alliance—describes the project as being “the most damaging project in the Amazon Basin,” representing a “considerable threat to the environment, rights, and health of several indigenous peoples in the location of the gas wells and along the pipeline route.”

One year after going on-line, Camisea gas reaches only 41 businesses and 600 homes in Lima, a city of over 8 million. The project continues to be cited as the cause of irreversible destruction to some of the world’s most diverse and threatened ecosystems. Reports continue of violations to the internationally-recognized rights of indigenous groups living in voluntary isolation in the rainforest near the Camisea gas field. Concerns are also raised about the health and safety of all communities located along the 800-kilometer pipeline route.

Anatomy of the Consortia

On September 19, while attending the UN World Summit in New York, President Alejandro Toledo, Peru’s first native Qechua-speaking national leader, said in an interview with Reuters that the Camisea Basin has much more than the 40-year reserves accessible today. In the 1980s, oil companies such as the Royal Dutch/Shell Group and the Mobil Corporation established a presence in the Camisea Basin, located in the Lower Urubamba River Valley of eastern Peru. These companies abandoned plans for major development in Camisea after the government of Peru rejected Shell and Mobil’s demand for a distribution monopoly and the right to set prices, as reported by the New York Times on July 17, 1998.

Current extraction wells, providing access to an estimated 11 trillion cubic feet of natural gas and 600 million barrels of liquid petroleum gas, are located in the area known as Block 88—two thirds of which is located within the Nahua-Kugapakori Reserve for Indigenous Peoples. Home to at least four distinct indigenous groups (the Nahua/Yora, Nanti, Kugapakori, and the Machiguenga/Kirineri), this reserve is one of five created in 1990 to safeguard the rights of indigenous groups living in voluntary isolations or in initial stages of contact with national society.

The Camisea Gas Project consists of three components: the exploration and extraction of the non-renewable resource at four drilling platforms in the Urubamba Valley (the “Upstream Project”), two pipelines to transport the gas from the Urubamba Valley to the coast of Peru (the “Downstream Project”), and two processing and distribution systems on the coast near Lima (the “Distribution Project”). One of these coastal facilities, a gas processing plant, is being built within the buffer zone of the National Reserve of Paracas, a marine refuge of international significance recognized by the Ramsar Convention on Wetlands of 1971, ratified by Peru in 1992, which states: “Under the Convention there is a general obligation for the Contracting Parties to include wetland conservation considerations in their national land-use planning.”

Ownership the Camisea Project, awarded in 2000, is shared by two overlapping consortia, one for gas production and another for gas transportation and distribution. The Upstream Consortium is formed by Texas-based Hunt Oil, Pluspetrol (Argentina), SK Corporation (South Korea), and Tecpetro, owned by Techint Argentina.

The Downstream Project is formed by Texas-based Hunt Oil (22.2%), Tecgas N.V. (Argentina, 23.4%), Pluspetrol (Argentina, 22.2%), SK Corporation (South Korea, 11.1%), Sonatrach (Algeria, 11.1%), Tractebel (Argentina, 8%), and Graña y Montero, the sole Peruvian company, with 2% of the ultimate ownership. The Distribution Project was assigned to Tractabel (Argentina) by Transportadora de Gas del Perú (TGP). Construction of the Paracas gas processing plant is contracted to Kellogg, Brown & Root, a subsidiary of Halliburton. Ray Hunt, chief executive officer of Hunt Oil, sits on the board of Halliburton and has been a major donor to the Bush campaign.

While the government of Peru has repeatedly pointed out the benefits of Camisea gas being used in Peruvian homes and businesses, the focus of project proposals is in making Peru a net exporter of gas—with plans to sell gas to Mexico, Chile, Argentina and the West Coast of the United States as soon as 2007. President Toledo has stated that Camisea gas will unify South America, yet Amazon Watch reports that half of all Camisea gas is intended to be exported to the western United States by 2009. When asked about the planned Camisea gas exports, President Toledo told the Miami Herald on July 12: “Let the free market operate.”

Initially intended to be mainly financed by loans from the Inter-American Development Bank and the US Export-Import Bank—both tax-payer backed institutions—the latter rejected a request for a $214 million loan for the Camisea consortium, citing environmental concerns. The IADB—in which the US government holds 30% of the voting power—delayed consideration of the project on two occasions due to outstanding concerns and pressure from lawmakers in Congress, environmental and human rights groups. Of main concern was the bank’s violation of its own environmental and social standards, which the Bush administration had played a key role in tightening. A likely reason for the Bush administration’s interest in tightening environmental standards is that it allows President Bush to negotiate an agreement requiring countries to offer greater market access if a violation occurs. Monetarily fining violators also benefits the US, as trade is not disrupted as with sanctions.

In September 2003, the US abstained in a vote on the project, and a $135 million loan was approved. Had the US voted a clear “no,” other member countries may have been swayed to oppose the loan as well. Critics consider the approval of the loan a breach of both modern industry standards and international environmental guidelines.

It is interesting to note that the World Bank and the US Overseas Private Investment Corporation (OPIC) kept their distance from the Camisea Project due to its failure to meet international social and environmental protection measures, citing the consortium companies’ inexperience and poor records. Other banks involved in the financing of the project include SACE (Italy, $20 million), the Andean Development Corporation ($50 million), Ducroire (Belgium, $170 million investment insurance), and BNDES (Brazil) and BICE (Argentina) with a combined $125 million. Citigroup serves as the consortium’s financial advisor.

Ethnocidal Impacts

The recent spill in Toccate is only the most recent of disasters caused by the oil and gas companies involved in the Camisea Basin. In the 1980s, the presence of the Shell Group directly contributed to the death of over half of the Yora/Nahua indigenous population living in voluntary isolation. The isolated Nahua had no immune defenses to common sicknesses such as the flu, gastro-intestinal and respiratory illnesses brought to the area by Shell employees and the loggers and missionaries that used Shell access roads to gain entry into the area. Today, illnesses within isolated indigenous groups are on the rise along the Rio Urubamba, as are reports of forced contact by the Camisea companies’ workers. The project also threatens the livelihood of indigenous peoples through water contamination, deforestation and erosion.

There are some 30 voluntarily isolated peoples in the Peruvian Amazon, exercising their internationally-recognized right to choose the moment and manner in which they make contact with national society. From the initial stages of the Camisea Project, this right has been violated. Amazon Alliance, an NGO focusing on the indigenous and traditional peoples of the Amazon Basin, reports that other subcontractors have left items such as machetes, clothing, knives, and mattresses along seismic lines; items which carry a potentially catastrophic disease threat. There have also been reports that TGP has allowed their helicopters to be used by missionaries in order to force contact with voluntarily isolated groups for religious purposes. These abuses are outlined in an August 2003 statement against the project by the Interethnic Association for the Development of the Peruvian Amazon (AIDESEP).

The Bank Information Center has records of forced contact by Camisea member companies dating back to August 2002, when Pluspetrol anthropologist Jose Luis Cabral openly admitted that groups of Pluspetrol representatives, accompanied by a Machiguenga guide, approached isolated groups by announcing their presence through a loud speaker. A separate incident, reported by anthropologist Kacper Swierk in July 2002, involved forced contact with a settlement of Shiateni by Pluspetrol personnel. The group was reportedly forced to leave their homes, threatened with arrest by the army as “terrorists,” and told that disease would kill them if they did not abandon the area. Workers from the subcontracted Canadian company Veritas forced contact with an isolated Kirineri settlement, telling the settlers to relocate in order for seismic testing to take place. Though a Peruvian government agency for indigenous peoples, the National Commission of Andean, Amazonian and Afro-Peruvian Peoples (CONAPA), was created in 2001 to address such issues, it has yet to develop and implement a plan to protect isolated indigenous peoples from contact. Instead, it provides guidelines for company workers as to what to say and do in the event of contact.

The issue of forced contact is particularly worrisome, considering the flawed compensation negotiations which have taken advantage of the lack of community experience in calculating monetary value in regards to their land and natural resources. Coupled with weak government oversight, the companies have taken to causing damages beyond the scope of agreements and then returning to the unprepared community to negotiate minimal compensation. In a summary of findings from June 2003 Investigative Mission to Indigenous Communities Affected by the Camisea Project, it is reported that in the village of Shimáa, consortium companies led the community to believe that outstanding compensation agreements will not be fulfilled unless the community agrees to additional construction.

The Washington Post website featured the Machiguenga community living in the village of Shimáa in a video documenting a landslide caused by the pipeline, as well as resulting erosion, water contamination, and the effects of construction noise on the group’s hunting, on August 19, 2003.

Irreparable impacts resulting from massive landslides and soil erosion caused by the pipelines’ steep route are directly linked to the health and safety of the local population. As heavy rains wash thousands of tons of soil and vegetation into local rivers, groups find themselves without the fish and clean water their survival depends on. Noise and pollution from river and air traffic has scared away game for groups that depend on hunting. Deficient local diets due to such severe declines pose immediate health dangers, while the erosion of traditional subsistence practices could have long-term effects on the cultural identity of the group. All of the above violate the minimum standards on the rights of indigenous peoples as set in the International Labor Organization’s Convention 169, ratified by Peru in 1993, particularly the right of prior consultation regarding any project on indigenous territories.

Also feared are waves of loggers and developers in the wake of the oil companies–the usual pattern–causing further deforestation, environmental degradation, social pressures, and resource conflicts.

Civil Society and Camisea

The Interethnic Association for the Development of the Peruvian Amazon (AIDESEP), Peru’s main advocacy group for the region’s indigenous peoples, demands complete abandonment of the project and immediate withdrawal from indigenous lands. However, many of the Peru’s civil society bodies have expressed a commitment to the development of the Camisea Project within the parameters of social and environmental safeguards.

Mobilization around the issue of the Camisea Project by Peruvian civil society, environmental, and indigenous groups has been the largest the country has ever seen. Over twenty organizations have united to demand full participation in the negotiations regarding the project. The Peruvian constitution states that all natural resources belong to all Peruvians, and any private party that exploits them must pay a “gas canon fee” equaling 50% of the total income that the state earns through taxes and royalties for the use of any resource. This distribution is one of the rights demanded by civil society groups, in a “Positions and Recommendations” document submitted to the IADB in July 2003. Other demands include continuous monitoring of the consortia, independent health and environmental monitoring, and relocation of the plant near the Paracas Marine Reserve. They also demand that the rights of the indigenous peoples in voluntary isolation are guaranteed, that no right-of-way routes be constructed, that the project be transparent, that affected communities have a say throughout the life of the project, and that a Camisea Project Ombudsman serve the communities throughout the life of the project.

The government of Peru, however, passed law #28455, which allocates 40% of the royalties from the project into a special fund to buy arms for the military and national police force. Moreover, no fund has been created to mitigate the impacts of the project on the communities and ecosystems affected. Regarding this law, Nadia Martinez states that, “It is truly unthinkable that funds that should be used for the ‘development’ of the country, especially for the development of the affected communities on the local level, be used to buy arms and maintain armed forces. The conditions that the IADB demanded included a development fund that would utilize 7% of the profits. As far as I know, this requirement has not been fulfilled. Yet 40% has been allocated for arms without consequence.”

While the IADB has agreed to a series of public meetings with civil society and non-governmental organizations, community members have complained that these do not represent a real exchange, but rather presentations of the consortiums’ plans and visions. The affected groups have gone as far as to boycott the meetings, stating that they are un-transparent, undemocratic, and that they are not allowed time to speak.

At a meeting in Lima regarding an expansion of the project into Blocks 56 and 76, referred to as Camisea II, community members stated that they were not presented the details of the project in a comprehensible form, and that the communities were given only one month to read the 4,000-page document and prepare their comments.

Such unfair negotiations have marked the project since its inception, critics charge. The Nahua, in a rare communication with national society, sent an advocate to publicly voice their rejection of such an expansion.

Asked via e-mail if the recent spills would affect their decision on financing an expansion of the Camisea Project, Ferriter of the Inter-American Development Bank states: “Involvement of the IDB in any future expansion of the project will depend on a number of complex factors, among them the environmental and social issues.”

Asked what impact the mishaps will have on expansion of the project, Nadia Martinez of the Institute for Public Policy says: “I would say that surely it will delay it for a bit, but it will not stop it. In December there was an explosion that left one dead, and just days later the IADB disbursed the loan to the consortium, which goes to show that this kind of disaster is considered part of the expected impacts and is not taken seriously enough for there to be serious consequences for the operating companies or the government.”

Asked if the Camisea Project could be carried out from this point forward in a socially and environmentally responsible way, Martinez answers: “It is too late. The damage is done… The IADB claims to be concerned about the poor in Latin America, yet they support devastating projects like Camisea that benefit primarily foreign oil companies and a few elites in the Peruvian government.”

Martinez says the next challenge facing the IADB will be whether to fund the expansion of the project. “If the IADB has learned anything from the disastrous Camisea experience, they will not go near the expansion project known as Camisea II. But if they do, we’ll be there to make sure they remember all they did wrong in the first one.”

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RESOURCES:

For an extensive list of resources in English and Spanish regarding the Camisea Gas Project, including articles, contacts, official documents, civil society analysis and meeting minutes, and useful websites, please visit The Bank Information Center at:

http://www.bicusa.org/bicusa/issues/camisea_natural_gas_project_peru/index.php

Amazon Alliance summary of independent monitoring report “Summary of Findings from June 2003 Investigative Mission to Upper and Lower Urubamba River Valley, Peru”
http://www.amazonalliance.org/camisea.html

Amazon Watch, “Peru: Camisea Natural Gas Project”
http://www.amazonwatch.org/amazon/PE/camisea/

Declaration of Indigenous Peoples in Defense of Life, Territory and the Environment, AIDESEP, Lima, Aug. 25, 2003 http://www.bicusa.org/bicusa/issues/AIDESEP_camisea_statement_25.08.03.pdf

Proyecto Camisea
http://www.camisea.com.pe/project.asp

IADB Sector Department page on the Camisea Project http://www.iadb.org/pri/english/dbase/projectSummary.cfm?ProjectNumber=PE0222

ECA Watch: International NGO Campaign on Export Credit Agencies http://www.eca-watch.org/problems/americas/peru/2001_01_25_sace.html

Halliburton Watch on Hunt Oil
http://www.halliburtonwatch.org/news/board_political_donations.html

Washington Post, Aug. 19, 2003, “Pipeline Problems: Shimaa, Peru” http://www.washingtonpost.com/wp-srv/mmedia/photo/081903-1v.htm

BBC, Aug. 10, 2004, “Peru prepares for the gas age”
http://news.bbc.co.uk/1/hi/business/3543060.stm

See also our last report on the Camisea Project:
/peru2.html

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Special to WORLD WAR 4 REPORT, Oct. 1, 2005
Reprinting permissible with attribution