13 May 2005
Read the latest updates about the Camisea Gas Project: find out about the planned project expansion and learn more about where the royalties are really going.
Written by Lyra Spang, May 9, 2005.
También disponible en [español]
A Brief Introduction: What is the Camisea Project?
Camisea is a natural gas extraction project located in the Amazonian region of Peru. It is the first project of its type in the country. Camisea gas extraction is divided into three components: four drilling platforms, two pipelines linking the Urubamba valley in the Amazon basin with the coast of Peru, and distribution systems in Lima and Callao. The project cost 2.7 billion dollars, with a possible future addition of 1 or 2 billion more to finance an expansion into Block 56, an exploratory gas field next to the original drilling ground. The Inter-American Development Bank is Camisea's most important investor (with a loan of $75 million dollars), but the Andean Development Corporation (Corporación Andino de Fomento or CAF in Spanish), BNDES (the Brazilian development bank) and Peruvian commercial banks are also involved. The companies Techint and Pluspetrol (from Argentina), and Hunt Oil of the United States received a 40 year concession to extract the gas, and together with Sonatrach (Algeria), SK Corporation (Korea), Tractebel (Belgium) and Grana y Montero (Peru), they are also in charge of the transportation and distribution of the product. About 50% of the gas will be exported to the United States, especially to the west coast, and deals are also being discussed with Chile, Mexico and Argentina.
Despite the support that it has received from the oil and gas industry and various development banks, Camisea was controversial from its inception, and it continues to be a contentious issue between civil society and the promoters of the project. The project will have (and is already having) massive impacts on the environment and regional communities. It is located in the Peruvian Amazon- an ecologically fragile area with incredible biodiversity. Additionally, almost 75% of the extraction operations are located in a national reserve for isolated indigenous groups that do not want contact with the rest of the world. Moreover, the consortium has plans to construct a liquefaction plant on the coast in the middle of an internationally renowned marine reserve.
Environmental organizations say that the project will destroy the Urubamba valley- a pristine ecological zone famous for its natural wealth. Civil society groups claim that the affected communities were not adequately consulted and that the banks did not consider nor adopt their ideas. They also state that the Peruvian government did not comply with the few mitigation measures that were required by the IDB, spending royalties to buy arms instead of helping those communities impacted by the project. The creation of an independent and impartial monitoring system has been delayed for months, and not all the required environmental and social studies, nor an analysis of potential alternatives have been completed, although construction is began in 2004. Even Citigroup and American Import/Export Bank (neither renowned for their environmental sensibilities), decided not to fund the project because they felt that the associated environmental impact was too massive and irreversible.
Despite all this, the project has received a prize from the magazine Project Finance and the IDB considers it a complete success.
Current News
Expansion of Camisea: Camisea Phase II under Consideration.
Despite all the controversy and debate surrounding the Camisea project (especially after there was a liquid spill in December), Hunt and Pluspetrol are looking for funds to expand the project. They want to construct more drilling platforms in Block 56, located to the south of the Urubamba valley, and they are talking informally with the IDB and the Import/Export Bank of America about financing the expansion. A 4,000 page EIA was completed in November 2004, and although copies were provided to communities in the expansion zone, they were not presented in a comprehensible form, and the communities were only given one month the read the entire document and prepare their comments. In response the communities demanded that the government and companies give them more time to review the document, but the only one town received an extension. The defective consultative process and these types of interactions with affected groups reflect the attitude of the investors. The people affected by the project do not matter to them, nor do they care about the global impact that the destruction of this important ecosystem will have. Despite speculations in the news suggesting that Camisea II could be approved in April 2005, it was the 4th and 5th of May when Pluspetrol Perú presented the EIA for Block 56 to the first public audiences. NGOs and community representatives claim that the consortium does not allow them to present their point of view at these meetings, that they do not respond to their demands and that there is no real dialog between the consortium and the affected people. Read more about the public audiences in Spanish here: Amazonwatch Website.
Read a letter from the affected communities about the consultations of the Peruvian government in Spanish here: Letter:on Amazonwatch web page.
Chile to receive Gas from Camisea. 29th of April.
Burdened by its energy crisis, Chile is looking north- and seeing opportunities in Camisea. A recent article in the Peruvian newspaper La Republica says that " Jorge Rodríguez Grossi, the Chilean minister of Economy and Energy estimated that Peruvian gas could arrive in his country by 2006, but that nothing is concrete yet." Juan Cayo, the Peruvian vice minister of Energy, says that there are two possibilities of how to sell the resource to Chile: either sell already processed liquid gas directly to the country, or construct a pipeline from Pisco (Peru) to Tocopilla (Chile), to transport natural gas.
The Chilean government and businessmen in Chile are looking at the possibility of constructing a 1,200 kilometer pipeline from the coast of Peru to a liquefaction plant to be constructed in northern Chile. The construction of the gas line would cost around US $700 million, but those involved believe that it would be a good option to augment the supply of natural gas in the country. Normally Chile purchases gas from Argentina, but as La Republica explains " Shortages in Argentinean gas have caused problems with electricity generation for the industrial zone of Santiago and companies in the middle of the country." With the construction of the new pipeline they expect to have access to a dependable supply of gas. The National Petroleum Company (Empresa Nacional de Petróleo or ENAP in Spanish)- a public company owned by the Chilean government- is also involved in the planning of the project. Hunt Oil, one the companies in the Camisea consortium, is talking with ENAP about the possibility of selling it liquid gas, and they also plan to participate in the bidding in May 2006. On the other hand, the company Tractabel, another consortium member, is currently conducting a feasibility study for the construction of the pipeline. The Peruvian Ministry of Energy and Mines claims that the construction of the gas line will benefit the southern portions of the country, but he doesn't explain how it will improve the zone after the project is completed, nor does he confirm if part of the earnings from the sale of gas to Chile will go directly to the affected departments. La Republica reports: " It is expected that the conclusions will be ready in June (2005) and the construction could last between one and two years. Read the articles in Spanish here: La Republica-29th of April ,La Republica-23rd of March
The IDB and Civil Society Representatives meet to discuss Independent Monitoring of the Camisea Project. 22nd of April.
Peruvian Civil Society Groups (SCP), including the Nation Society of the Environment, AIDESEP, the indigenous organization CECONAMA and others met with the company TGP, the Camisea Interest Group and representatives of the Inter-American Development Bank in its offices in Lima to talk about establishing a system of independent monitoring for the project. There was much disagreement between the investors and civil society about the plan and its financing. Community groups want a preliminary audit of the system, an action that the IDB says would delay the process unduly. Additionally, they asked for an improvement of the already existing Community Monitoring Plan. The IDB claimed that to revise it would require a separate process that had nothing to do with the current proposal for the Independent Monitoring System. The SCP responded with the statement that the Community Monitoring Plan did not function and had no credibility and that the Independent Monitoring System would not accomplish much if the Community Plan was not effective. When financing of the system was discussed, the IDB declared that it only would provide 40,000 dollars annually to finance the independent monitoring, an extremely low number for a plan that eventually will have to extend from Urubamba in the Amazon basin all the way to the Peruvian coast. On the other hand, the indigenous communities and NGOs do not trust the entities that currently monitor the project ( The Peruvian Government, the industrial consortium, the IDB and PMAC) and they want to use more independent groups to implement the new monitoring plan. A consortium of civil society representatives will be formalized by the end of June, and together with other groups, will be in charge of the Monitoring Plan. Meanwhile, the formal agreement between the IDB and the SCP and the terms of reference for the consultative group and advisors will be finalized.
Instead of developing the country, 40% of Camisea Project Royalties will go to buy Arms.
In its contractual letter, the Peruvian government promised as part of the conditions for the IDB loan to create a fund with 7% of Camisea's royalties to mitigate the massive impacts of the project in regional communities. To date the fund has yet to be created, and the IDB dispersed the entire US $75 million without demanding compliance. Meanwhile, in December of 2004 the Peruvian government created and passed law number 28455 " El Fondo para Las Fuerzas Armadas y la Policia Nacional" (Fund for the Armed Forces and National Police). Beginning the first of January 2005, 40% of the federal royalties from the project will go to a special fund to buy arms for the military and the national police. The IDB has said nothing about this abuse of trust, nor has it asked for immediate reimbursement of the loan. The American government has also kept silent about the issue, although under the regulations of the replenishment that the IDB received from the American Treasury in 1997, it should not have dispersed the loan to Peru until they achieved full compliance. You can read the full text of the law in Spanish here:
Ley numero 28455 (Peruvian Congressional Website)
The Camisea Projects wins the Prize "Operation of the Year 2004" from Project Finance Magazine. March 10th.
The Camisea project received two prizes as "Operation of the Year" from Project Finance Magazine. It was chosen as " Latin American Operation of the Year 2004" and the "Latin American Oil and Gas Operation of the Year 2004". The magazine stated that it was the mix of private and public investment, from both multilateral and private banks, that made the project a success. No mention was made of the huge impact of the project on the environment, not the lack of adequate consultation in affected towns. The involved companies and banks, especially the IDB, are very proud of the project and they believe that the prize proves that the pipeline was worth their investment. Civil society groups and affected communities take a different view. Read the press release on the IDB website.
Opposition mounts to a Thermoelectric Plant that will use Gas from Camisea
The company of Egechilca plans to construct an enormous plant in the town of Las Salinas de Chilca, which is famous for its medicinal lagoons and beaches that attract thousands of tourists and residents from Lima on their yearly vacation. The plant will be located almost in the middle of all the activity of the resort town: 150 meters from the famous lagoons, 50 meters from the beach and only 400 meters from the town itself. The plant will run on natural gas from the highly disputed Camisea pipeline project, and will cost US $300 million. It is expected to produce between 20 - 25% percent of the electricity in the country. Government and company representatives claim that the plant will lower the cost of electricity, which is set to rise another 2% in May.
Considering the location of the plant, it is no surprise that there is a strong opposition to the project. Some of the groups against the project include the residents of Las Salinas, visitors from Lima who go there for vacation and a number of environmental organizations. They say that the project will destroy the tourist industry of the town and the region's environment. The majority of those living in the area are dependent on one or the other to earn a living. According to Fernando Ruiz, delegate from Las Salinas: " The population, the hotel owners, the fishermen and even those who come here on vacation, we all disagree with this project. This monster on the beach will cause a grave deterioration of our ecosystem and will violate our environmental rights." Environmental groups agree- The Ecological Forum has declared in a recent report that the Environmental Impact Study (EIA) performed by the company was deficient. The Forum claims that the EIA does not take into account the diverse impacts of the plant on the environment, nor does it discuss how to mitigate or avoid these impacts. The population of Las Salinas has presented their statement rejecting the project to the Minister of Energy, without arriving at a resolution. Read the details in Spanish here:
More Civil Society Activities
Public Audiences a Failure? Machiguengas Communities reject a Public Presentation of the EIA for Block 56. 8th of May.
The 8th of May representatives of the Native Community Shivankoreni declared that in accordance with the decisión of their General Assembly they rejected the public audience planned for the 9th of May and that there for they would not lend their venue for the meeting. The leaders of the community also denounced the Ministry of Energy and Mines (MEM) and Pluspetrol, saying that they pressured the leaders to accept an audience even though the communities of the Lower Urubamba had already unanimously agreed on the 22nd of April to suspend any audience about Block 56. In a official proclamation they declared that the Camisea project had only hurt the people of Machiguengo and that the exploitation of Block 56 would affect them even more, as it would impact 7 different indigenous communities. "The proposed platforms are located almost directly on top of our towns" noted the representatives.
The article by SERVINDI says that after the toxic liquid spill that occurred last December, the indigenous communities of the Lower Urubamba decided to demand that before expanding the Camisea project, the consortium make clear the causes of the spill, perform serious evaluations and adopt effective methods of control. This has not happened, and meanwhile MEM and the involved companies are seeking funds and formulating concrete plans to extend production to Block 56. The affected communities say that the public audiences do not represent a real consultation, but rather presentations of the consortium's vision, and that they do not listen to the people who will be directly affected by the expansion. Therefore the affected groups have decided to boycott the audiences, in a gesture of rejection of the un-transparent and undemocratic process of consultation, and of a project that threatens to destroy their communities and way of life. Read more here in Spanish: Servindi webpage.
Representatives of Civil Society meet with the IDB to present their Plan for an Independent Monitoring Mechanism for the Camisea Gas Project.
On the 2nd of March, 2005, Peruvian civil society, represented by the SCP (sociedad civil de Perú) group, met with the IDB in Lima to present their plan for an independent monitoring mechanism for the controversial Camisea Gas Project. The proposal included the creation of a panel of expert consultants and a panel of the various actors involved in Camisea. An independent review of the project would be conducted by the consultants who would pass their recommendations on to the panel of actors for review and implementation. An independent review and the creation of an independent monitoring mechanism might allow civil society to effect important changes in the project. Read more here: BIC website.
Meetings of Civil Society with the Camisea Consortium turn into Presentations for the Companies. 8th of February.
The 8th of February 2005, the IDB hosted an official meeting with representatives of civil society about the Camisea Project. It was the second in a series of public audiences- supposedly created so that the consortium could develop a productive dialog with affected communities about their problems with the project and so that they could present their comments on the EIA executed for Block 56. The 20th of January there was a protest about the first public audience for the EIA, because communities claimed that the consortium did not give them adequate time to review the document, which is 4,000 pages long. NGOs like Amazon Watch and Environmental Defense attended the February 8th meeting, along with Peruvian community representatives. In the official agenda for the meeting, the Peruvian government, the IDB and the investors had 35 minutes to make their presentations about the project, but in reality their expositions lasted almost 2 hours. After the presentation , all the bank directors and senior officials left the meeting. The civil society representatives did not have time to present their comments, nor have a dialog with the consortium, and the consortium would not let them extend the meeting so that they could do so. After such a start, the communities are not disposed to attempt to negotiate with actors who do not listen. Read the letter to the IDB about the meeting: Amazonwatch website.
General Resources
The Banks
The Companies
The Press (in Spanish Only)
Civil Society (This is only a small sample of the hundreds of groups working on Camisea)
In Peru (Websites in Spanish)
In the United States