Camisea Pipeline Not Measuring Up
25 July 2006
Spills and other disappointments raise concerns about project in indigenous areas.
The Camisea gas pipeline is supposed to make Peru energy independent, reduce the cost of electricity, create thousands of jobs, and contribute a percentage point annually to Peru’s economic growth rate for the next 30 years.
But after almost two years of operation, the Camisea pipeline, the most ambitious energy project in the history of Peru, is not delivering the benefits anticipated to communities in the Camisea region where the precious gas originates.
Electricity prices have not decreased. And Peruvians are concerned that the second phase of the Camisea project, focusing on exports, may make Peru less energy secure by sending most of the gas out of the country.
There have been five spills in the 750-mile liquid natural gas pipeline linking the upstream production area to the coast. These spills have called into question the project’s commitment to environmental safeguards. The spills were considered serious enough for Peru’s congress to investigate. At the end of June, press reports in Peru said the body called for a renegotiation of the contract with the project consortium running the pipeline.
On a recent Oxfam America-organized delegation to the Camisea region, Oxfam America staff and representatives from World Wildlife Fund, Amazon Alliance, the Wallace Global Fund, and the US Catholic Conference of Bishops encountered community representatives with serious concerns for the environment.
Their biggest worry: fish. Increased barge and other river traffic, spills and erosion of soil into the rivers are blamed by some indigenous community representatives for a reduction in catch for communities dependent on fish for protein. “The companies involved in the project seem to take an ambiguous position on the lack of fish,” said Oxfam America’s policy advisor Ian Gary. “They are compensating communities for impacts from river traffic, while denying the project has had any impact on fish population.”
Communities that have allowed the pipeline to cross their land are concerned about the level of compensation they negotiated with the main companies involved in the pipeline project, TGP and Pluspetrol. (The US company Hunt Oil is also an investor in the project.) Some community members said they felt threatened and coerced into signing agreements with the companies, and recent spills have worried many villagers.
“The communities are concerned about the potential for further contamination throughout the life of the 30-year project, and feel they have received very little compensation compared to the risk,” Gary said. In some villages, families are getting as little as $20 a year in compensation for impacts.
In terms of anticipated revenues allocated at a local level, villagers in the area are also disappointed. Communities visited by the delegation reported they are still waiting for investment of pipeline revenues in local schools and health facilities. This sort of infrastructure is sorely needed, according to Walter Kategari, the head of Oxfam America partner COMARU (Machiguenga Council of the Urubamba River), who accompanied the Oxfam America delegation. "The few health clinics operated by the Peruvian government don't even have medicines," he said.
Government and pipeline consortium officials reported that $22 million in royalties were disbursed to the municipality of Echarate in 2005, but indigenous people in that area were not aware of any spending of these monies. The Inter-American Development Bank (IDB), a taxpayer-supported institution with a mission of economic development and reducing poverty, provided $75 million for the project. It has acknowledged that local government capacity to manage and spend the royalty money wisely is severely lacking.
These concerns about the $1.7-billion Camisea pipeline are coming out just as the IDB as well as the United States Export-Import Bank are anticipating company requests for funds for the next phase of the pipeline project, which will involve expansion into new areas as well as a new export facilities such as a liquid natural gas plant on the coast. Estimated costs for this next phase may exceed $800 million.
