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Saturday's
Lagniappe
Leaky
pipes, stingy aid slow Peru gas project
Jim Landers/ Dallas Morning News/MCT
A construction crew works on a Camisea natural-gas pipeline
project at a planned bridge site over a jungle ravine in Peru.
The project's supporters say it will be a huge boost for Peru's
economy.
By
Kelly
Hearn
NEAR
CAMISEA, PERU – Across the bow of a cargo boat, Alcides
Huinchompi points to loading platforms jutting from the banks
of the Urumbamba River. "That is what we are fighting against,"
says the Machiguenga Indian activist from deep inside the Peruvian
rainforest.
The remote outpost is part of the Camisea Gas Project, a $1.6
billion project for piping Peruvian natural gas 340 miles from
the jungle floor, crossing 14,000-foot Andean mountains to markets
in Peru and - by 2010 - the US.
Supporters say it will be the catalyst for an unprecedented
economic boom for impoverished Peru. But environmental concerns
have made the flagship project a political football in Washington
and Lima.
Camisea
is backed by an international consortium of companies, including
Texas-based Hunt Oil, and the US taxpayer-funded Inter-American
Development Bank (IDB). It's slated to turn Peru into a net
energy exporter and save $4.1 billion in energy costs from 2004
to 2033, according to the IDB. It will also create government
royalties - one Peruvian province has already landed more than
$254 million.
But critics
want to know why one of the project's pipelines has ruptured
five times since December 2004, impacting sensitive ecosystems
and remote jungle communities. They also complain that benefits
have not trickled down to poor Peruvians and that the IDB, which
put in $75 million in 2003, has not fulfilled its oversight
role.
"We
are of the view Camisea has not been a success. It could have
been better designed," US Treasury Assistant Secretary
Clay Lowery told a Senate foreign relations hearing last week.
The hearing focused on problems with multilateral banks funding
pipelines in developing countries.
Environmentalists
say Camisea's first phase must be fully investigated before
the IDB supports further projects here. A $2.8 billion liquefied
natural gas project is being planned to ship Camisea gas to
foreign markets. Peru LNG - a consortium consisting of US-based
Hunt Oil, Korea's SK Corp., Argentina's Pluspetrol, Spain's
Repsol-YP, and Algeria's Sonatrach - is asking the bank for
$400 million in funding for that project.
In February,
a nonprofit US engineering consultancy E-Tech, that works with
activist groups accused the consortium that built the faulty
pipe of rushing construction and using second-hand pipes to
save money. The consortium, known as TGP, has offered documents
it says proves the pipes were new and has promised to spend
$25 million this year to increase safety.
Meanwhile,
a Peruvian Congressional investigation last month criticized
consortium members and the Peruvian government for improper
oversight of Camisea. Peru's Ministry of Energy is launching
a technical audit of the pipe, as is the IDB. Thus far the Peruvian
government has levied fines against TGP for well over a million
dollars but has collected nothing.
Problems
on the ground
In remote
jungle communities Camisea's promises are overshadowed by its
pains. Gas money has spawned development projects such as clinics
and schools for remote jungle communities. But most villagers
say development, when it comes, doesn't outweigh damage.
Echoing
sentiments of nearly every villager interviewed for this story,
Matias Rios, the mayor of the tiny community of Camisea, says
companies don't do enough and local government officials pocket
the money meant for development "We were promised schools,
houses for teachers, running water," he says. "That
was two years ago. Where are they?"
Villagers
worry most about their subsistence lifestyle. "Before the
companies came, people here fished and hunted," says Mr.
Huinchompi. "They brought us development but they also
brought contamination and scared away fish and animals we need
for food." Myriam Caceres, a nurse in a nearby village,
says she sees cases of malnutrition due to lack of fish.
Some companies
offered compensation and programs to restock fish populations.
But Peter Kostishack of Amazon Alliance, a US-based watchdog
group, says concerns over fishing could lead the region's peaceful
communities to protest, as happened in 2005 when Machiguenga
Indians blocked worker access to certain sites.
Leonardo
Cardenas Rio, a farmer living near Camisea, expects protests
if villagers' complaints aren't met. "We won't destroy
things but we will keep them from coming here," he says.
Despite
Camisea's controversy, Hunt Oil spokesperson said in an e-mail
the company "is very close to signing a mandate letter"
with the bank for the project's next phase.
Bernardo
Frydman, an IDB official in Washington, said in a telephone
interview last week that the Peru LNG export phase is "important
for Peruvians and Americans, given the strategic value of gas
for the energy matrix in the region." He said the bank
hasn't made a commitment but expects to sign a mandate letter
which is "a formal engagement for the bank to analyze the
project."
He said
an IDB-sponsored technical audit of the pipeline, the final
stage of which is due at the end of the year, would not be made
a condition in order for the bank to analyze the project. "The
result would, however, influence our willingness to formally
consider the loan," he says.
Many Peruvians
support the project
Although
poor Peruvians living near the project feel they have missed
the benefits, most citizens support Camisea, says Manuel Saavedra,
president of CPI, a Lima-based polling firm.
"Many
advantages really have not been realized for the average citizen,
but most people see this is an important investment for job
creation and generating resources," he says.
Peru's recently
elected president, Alan Garcia, plans to reevaluate royalty
schemes in government contracts with Camisea's consortium members.
The contracts were signed when gas prices were low and many
Peruvians feel the government should increase its share of hydrocarbon
operations, as governments in Venezuela and Bolivia have done.
"Many
in Congress want Garcia to take another look at the contract
so that the interests of the people and those of private investors
are more balanced," says Fernando Trigos, a Peruvian aide
to the congressman who spearheaded last month's congressional
inquiry into the project.
Mr. Garcia
in June defeated Ollanta Humala, a populist candidate favoring
gas nationalization who received overwhelming support from poor
Peruvians in the Camisea project area.
