Peru's Camisea Gas Project is currently the most damaging project in the Amazon Basin. Located in the remote Urubamba Valley in the south-east Peruvian Amazon, the $1.6 billion project includes two pipelines to the Peruvian coast cutting through an Amazon biodiversity hotspot described by scientists as "the last place on earth" to drill for fossil fuels. Nearly 75 percent of gas extraction operations are located inside a State Reserve for indigenous peoples living with little or no contact with the outside world, who have been forcibly contacted by the Camisea consortia in violation of their internationally recognized rights. A gas processing plant is being built on the Peruvian coast within the buffer zone of a marine reserve of international significance.
For the final phase of the project estimated to cost an additional $1-2 billion, Texas-based Hunt Oil will construct a plant to liquefy natural gas for export to the United States. Kellogg Brown & Root, a unit of Halliburton, is in line to build it. Half of Camisea's gas will be shipped to the United States to supply West Coast energy markets. This flood of cheap gas could undermine California's clean energy programs.
The project, now said to be 70% complete, is racing forward to meet its August 2004 deadline for completion. Inexperienced companies with poor environmental records have plowed ahead with construction, showing neither the will nor the ability to avoid the serious environmental and social impacts now affecting the entire local population. Government oversight is weak and project financiers seem unable and unwilling to implement international standards to stop the devastation.
The Camisea Project is owned by two consortia of small companies with poor environmental records led by Hunt Oil - a company with close ties to the Bush administration. Chief Executive Ray L. Hunt contributed to President Bush's presidential campaign and also sits on the Board of Halliburton, the company formerly headed by Vice-President Dick Cheney already involved in Camisea.
The gas production consortia is composed of: Pluspetrol (36%); Hunt Oil (36%); SK Corporation (18%); Tecpetrol (10%). The gas transportation consortia named TGP is operated by Techint and includes: Pluspetrol (23.41%); Hunt Oil (22.2%); SK Corporation (22.2%) Sonatrach (11.01%); Tractebel (11.09%); Tecgas (8%); Graña y Montero (2%). Belgium's Tractebel will carry out gas distribution in Lima potentially financed by a Belgian export credit agency.
Click to enlarge Camisea maps:
Members of the upstream consortium are Pluspetrol (40%), Hunt Oil (40%), SK Corporation (South Korea) (20%). Downstream members are Techint (30%), Pluspetrol (19.2%), Hunt Oil (19.2%), SK Corporation (9.6%), Grana y Montero (Peru) (12%) and Sonatrach (Algeria) (10%).
Project sponsors picked up over $600 million of project costs while waiting for decisions on public financing from the United States Export Import Bank (Ex-Im) and the Inter-American Development Bank (IDB), delayed for 10 months due to escalating criticism from indigenous groups, Peruvian civil society, international NGOs, US Congressional representatives and the Banks' own environmental auditors. Citigroup and the Overseas Private Investment Corporation had already chosen to reject the Project.
While in August 2003 Ex-Im turned down $214 million of loan guarantees for the project citing unresolved environmental concerns, the Inter-American Development approved a direct loan of $75 million and a syndicated loan of $60 million to the transportation consortia in early September 2003.
IDB endorsement effectively gives project companies a green light to continue without attending to significant project flaws. The IDB's own environmental loan conditions fail to address the concerns of Peruvian civil society. Critics also argue that public monies to Camisea fly in the face of internationally accepted safeguards such as World Bank policies and the recently announced Equator Principles being implemented by a dozen private banks. IDB scrutiny has yet to result in significant on-the-ground improvements leading observers to conclude that the Bank lacks the political will to implement social and environmental protection measures.
The Andean Development Corporation (CAF) provided $75 million in financing and the Brazilian Development (BNDES) granted a loan of $109 million to TGP. The Italian export credit agency, SACE has yet to make a decision. Remaining funding is expected to come from private sector financiers and potentially other European export credit agencies.
The Camisea project is devastating some of the most diverse and threatened biological complexes in the world. The remote and hitherto inaccessible Lower Urubamba is a roadless region of global ecological significance. The pipelines cut through the Vilcabamba region, an area considered by conservationists to be of almost unparalleled biological richness.
Yet, as with pipeline projects throughout the Amazon, the opening up of forest to build the Camisea gas pipelines threatens to bring a wave of migrants, loggers and developers to the area resulting in deforestation, environmental degradation and social pressures. The pipeline consortium will not close off the pipeline route and have left responsibility for controlling colonization in the hands of local communities, potentially placing them at the center of future conflict over land and forest resources.
© Amazon Watch.Camisea construction crew.
Camisea companies have breached both modern industry standards and international environmental guidelines. Technical experts recently documented irreparable impacts on critical natural habitat resulting from massive landslides and soil erosion from the pipeline's extremely steep route. Erosion during recent heavy rains has washed thousands of tons of soil and vegetation into local rivers.
The Camisea Project is jeopardizing the health and safety of Machiguenga indigenous communities living along the Urubamba River. They live in small communities dispersed throughout the forest and depend largely on game, fish and forest products. Some communities now have no clean drinking water due to river pollution. Disregard for safety regulations by project workers has already killed one Machiguenga child. The reduction in fish and game stocks caused by project construction is threatening their staple diet. Local health workers testify that small children are at risk from chronic malnutrition. Illness is on the increase throughout the Urubamba. In June 2003 one Machiguenga man stated: "Now there is such a combination of illnesses that we can't identify the illnesses that we get."
The Nahua, Nanti, and Kirineri are semi-nomadic peoples who live in voluntary isolation with little or no contact with the outside world within the Nahua Kugapakori State Reserve neighboring the Urubamba River. The Reserve was created by the government of Peru over a decade ago to protect these vulnerable peoples from outside intrusion. However, in violation of internationally recognized indigenous rights, Camisea companies have forcibly contacted them, robbing them of their right to chose their own lifestyle and exposing them to sickness. 42% of the Nahua population already died from introduced diseases to which they have no immunity when Shell conducted gas exploration in the mid-'80s. There is evidence that increased disease among the Machiguenga will also infect peoples within the Reserve.
To fuel its ambitious export project, Hunt Oil is also interested in acquiring oil concession Block 57 located adjacent to the Camisea Project concession and Manu National Park. Block 57 completely covers the traditional territories of the Nahua people who are in the initial stages of contact with the outside world. The Nahua recently took the unprecedented step of publicly communicating through local advocates their rejection of all oil and gas operations within their lands:
"In the past, Shell worked here and almost all of us died from the diseases...We know that if another company comes here, our rivers and land will be destroyed. What will we eat when the rivers are dead and the animals have run away?"
© 1998 Lilly/Amazon Watch.Camisea is one of the most pristine and biologically diverse rainforests in the world.
Pluspetrol and Techint have appalling environmental track records. In 2000, a Pluspetrol oil spill devastated one of Peru’s largest protected areas, the Pacaya-Samiria Reserve, and seriously affected the health of the Cocamas-Cocamillas people who suffered severe diarrhea, skin diseases and malnutrition after their food and water supplies were decimated by toxic pollution. In the northern Peruvian Amazon, Pluspetrol continues to pump oil wastes into local rivers causing stomach ailments, cancer and respiratory diseases among Achuar and Quichua communities.
In early 2002, a huge explosion the second one in less than a year along an Argentinean gas pipeline operated by Techint, the contractor for the Camisea pipeline, again sent flames leaping through the Yungas forest, an area of critical conservation status, home to the rare jaguar. In Ecuador, Techint is in charge of construction of the OCP pipeline and has been embroiled in controversy, facing lawsuits, protests, and fines for the destruction of protected areas and the habitat of rare endangered species.
© Amazon Watch.
Camisea construction from the sky.
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