An Independent Environmental and Social Assessment of the Camisea Gas Project - By: Patricia B. Caffrey

Commissioned by Peruvian indigenous organizations:
The Machiguenga Council of the Urubamba River (COMARU) and the Inter-Ethnic Association of the Peruvian Amazon (AIDESEP)


ACKNOWLEDGEMENTS:

Many individuals and their organizations with a broad array of experiences and knowledge have contributed to and enriched this independent review. I would like to thank the following people for their technical input into the analysis: the Machiguenga communities of the Urubamba Region, Janet Lloyd of Amazon Watch, Bahram Jafari an independent consultant in the design and development of gas projects, Amparo Herrera of Peru Verde a non-profit organization operating out of Timpia - Lower Urubamba and Meche Lu of E-Law. I would also like to thank the following people who reviewed and made suggestions for strengthening the report: Juan Carlos Riveros of WWF-Peru, Lily la Torre of Racimos de Ungurahui and Lelis Rivera of CEDIA. Thanks as well to the anthropologists Conrad Feather, Gregor MacLennan and Lev Michael. The translators also deserve special recognition for their good work: Violeta Villacorta, Alex Taylor and Roberto Espejo. There were several individuals who accompanied me throughout the entire process of producing this independent study and they deserve special thanks: Cathy Ross, Keith Slack and Javier Aroca of Oxfam America, Atossa Soltani of Amazon Watch and Jorge Agurto - the Co-coordinator of this effort. Finally, we would like to thank the Amazon Alliance for their coordination efforts and Global Green Grants, Oxfam America, Rainforest Action Network, and Tropical Nature for their financial support.

TABLE OF CONTENTS


ACKNOWLEDGEMENTS..................................................................................... 2
TABLE OF CONTENTS........................................................................................ 3
I. EXECUTIVE SUMMARY.....................................................................................4
II. INTRODUCTION................................................................................................7
III. PROJECT DESCRIPTIONS AND MAP.............................................................. 9
A. GAS TRANSPORT: DOWNSTREAM........................................................9
B. BLOCK 88 - EXPLORATION, EXTRACTION AND PROCESSING OF GAS:
UPSTREAM.............................................................................................. 11
IV. ANALYSIS AND OBSERVATIONS.................................................................. 14
A. INDIGENOUS PEOPLE LIVING IN VOLUNTARY ISOLATION.................... 14
2. International Legal Agreements on Indigenous Rights:................................17
3. Analysis of the Pluspetrol's Social Impact Study:............................................... 18
B. OTHER SOCIAL IMPACTS.............................................................................. 21
1. INTRODUCTION:...................................................................................... 21
2. Best Practices and International Standards: 23
3. Observations: Environmental Impact Assessments, Environmental Management Plans and Community Relations Plans: 25
C. BIODIVERSITY IMPACTS 28
1. Introduction: 28
2. Best Practices and International Standards: 31
3. Observations: Environmental Impact Assessments and Environmental Management Plans: 33
V. CONCLUSIONS AND DESIRED OUTCOMES 39
A. CONCLUSIONS 39
B. DESIRED OUTCOMES 44

I. EXECUTIVE SUMMARY

Peru's Camisea natural gas field (Block 88) and pipeline project will be constructed in one of the world's most environmentally and socially sensitive areas. A region of great biodiversity, Camisea is home to Machiguenga, Yine, Nanti, Nahua and possibly Kirineri peoples including indigenous populations living in voluntary isolation. The Cordillera of Vilcabamba and the Lower Urubamba Region are areas of global ecological importance. Conservation International has prioritized the Cordillera of Vilcabamba as one of twenty-five global "hotspots" for conservation because of its biological richness, high incidence of endemism and highly threatened status. World Wildlife Fund has designated the Southwestern Amazon, the Lower Urubamba located at its heart, as one of their "Global 200" ecoregions prioritized for conservation efforts because of its high biodiversity and globally important ecological functions.

This review provides an independent assessment of the most significant potential environmental and social impacts of the Camisea natural gas field and pipeline project on the Urubamba River Valley. The assessment devotes particular attention to analyzing concerns raised by local indigenous peoples' organizations and by national and international environmental and development organizations working to support indigenous peoples in the area. The review was commissioned by the Consejo Machiguenga del Río Urubamba (COMARU), the Asociación Interétnica de Desarrollo de la Selva Peruana (AIDESEP) with support from the cooperating organizations - Amazon Watch, Oxfam America and the Centro para el Desarrollo del Indígena Amazónico (CEDIA). The technical review was conducted by an independent group of experts who worked closely with the Grupo de Interes and the local stakeholders to research, analyze and finalize this report. The technical experts included independent consultants in addition to voluntary input from experts from the following organizations - Racimos de Ungurahui, AIDESEP, World Wildlife Fund Peru, COMARU, CEDIA, Oxfam America, Peru Verde, ELAW Peru, and Amazon Watch.

The technical experts reviewed the current Environmental Impact Assessments, Environmental Management Plans, biodiversity assessments and other key project-related documents for both the upstream and downstream projects. These documents were compared with (a) similar documents prepared for the Shell-led Camisea consortium of 1996-98 and (b) relevant World Bank standards and (c) similar documents. The preliminary analysis was presented, discussed and finalized during a series of workshops held with interested stakeholders of the Urubamba River Valley.

Two consortia will implement the Camisea Gas Project. The transport or downstream part of the Project will be implemented by Transportadora de Gas del Peru (TGP) - a consortium of several companies: Pluspetrol (Argentina), Hunt Oil (USA), SK Corporation (Korea), Sonatrach (Algeria), G y M (Peru) and Tecgas (Argentina - chief operator of the Project and subsidiary of Techint). The major characteristics of the transport part of the Project are:

· Gas pipeline - two pipelines to be buried side by side (natural gas and liquid natural gas), 700 kilometers from lowland rainforests to the coast (25 meters in width right of way - ROW) with the capacity to transport 250 million cubic feet of natural gas per day and 70,000 barrels of LNG per day.
· Pumping and pressure stations: 2 pumping stations in the sensitive rainforest area.
· Two campsites cleared and established in the sensitive rainforest area with 500 to 1000 workers.

Pluspetrol (Argentina - lead operator), Hunt Oil (USA), SK CORPORATION (Korea) and Hidrocarburos Andino S.A.C (Peru) will implement the exploration and extraction part of the Project that will take place in Block 88. The major characteristics of this part of the Project are:

· Seismic testing - paths of 1.5 meters. in width will be opened approximately every 300 meters, north-south and east-west, and will produce explosions in an area of 800 kilometers², 66 heliports and various campsites will occupy 8.5 hectares, and there will be 6,400 unloading zones that will occupy 23 hectares.
· Extraction - platforms and wells, 4 platforms (1 to 3 hectares) and 12 wells now, and up to 9 more in the future.
· Transportation - pipeline network between platforms and processing plant within Block 88, 64 kilometers, 25 meters ROW.
· In Las Malvinas: a gas separation and condensation plant, related infrastructure, airstrip, port facilities, storage tanks and a campsite in an area of 72 hectares with between 500 and 1000 workers.

The analysis, observations and conclusions in this report are detailed and extensive. The major observations and conclusions are as follows:

Irreversible Negative Impacts and Compliance:
The Project will have negative irreversible impacts on the biodiversity of this area and on indigenous groups living in isolation regardless of the implementation of the strictest mitigation measures. In addition, there is concern that even if the consortia were to plan the strictest measures that in reality the companies will not adhere to and comply with plans and targets. There are no financial incentives or strict enforcement in place to ensure compliance with plans over the life of the Project. The Peruvian government's capacity to enforce compliance is weak. None of the companies involved in the consortia have a history of applying best social and environmental practices. In the case of TGP, mitigation targets and measures are deficient. Project plans do not include truly independent and transparent monitoring processes and lack mechanisms for ensuring independent technical and advisory oversight.

Neither component of the Project meets World Bank standards. Exploration, extraction and transport activities will destroy primary tropical humid forests and will lead to degradation and conversion of critical natural habitats. Special analysis of impacts on indigenous groups - particularly indigenous groups living in voluntary isolation is deficient. Corresponding plans to prevent and mitigate negative impacts to these groups is lacking. Both companies are in violation of the ILO Convention 169. Local stakeholders were not given appropriate information or sufficient time to study and respond to the environmental impact assessments. Current compensation negotiations and practices do not allow for free and informed decision-making on behalf of the indigenous groups. They have not been involved in decision-making over issues that will affect them.

Recognition of Induced Impacts and Control of Access:
Both EIAs include extensive sections on analyzing potential direct impacts. However, analysis of indirect induced impacts and corresponding environmental management measures to mitigate them are deficient. The EIA for the upstream component does analyze indirect induced impacts however, the environmental management plan is weak when it comes to measures for preventing or mitigating induced impacts. The EIA for the downstream component does not recognize indirect induced impacts therefore, the environmental management plan does not address them. Both components were studied separately so there is no recognition of the combined impacts of both components. For example, Pluspetrol plans to prohibit the construction of roads to hinder access however, no mention is made of the fact that the other component - the gas pipeline, will open up access to the Cordillera of Vilcabamba, Lower Urubamba and Block 88. For such a complex Project that will be implemented in an extremely sensitive area this is a significant shortcoming. The local communities, human rights and conservation groups are very concerned about indirect impact issues such as improved access which will lead to increasing colonization, deforestation, environmental degradation, health hazards, loss of cultural integrity and social conflict. The companies must be required to implement measures to control access.

Community Relations:
Local stakeholder relations with the companies are troublesome. Although some of the initial consultations went well - especially those conducted by ERM, the public involvement in the EIA reviews have been woefully inadequate. The local stakeholders have not had any input into the Project design, environmental management plans or proposed compensation measures. Compensation negotiation practices have served to divide, confuse and weaken the Machiguenga community. The companies are negotiating exclusively on their terms and communities are faced with having to negotiate with one to three different companies over related issues. There has not been any effort to integrate approaches between companies. Different "deals" are being presented to each community. What appears to the communities' as a chaotic and divisive process is also not addressing their concerns. Instead, it is generating mistrust between the companies and the local people. The local communities are very aware of the potential social and environmental problems and they realize that the divided and partial compensation deals will not address these issues. The companies need to combine efforts and resources to work with the communities to effectively address their concerns regionally and in an integrated fashion. The companies should work with the communities collectively - not individually.

Indigenous Peoples Living in Isolation:
The magnitude of the Camisea Gas Project demands a thorough and accurate assessment of the needs and wishes of peoples living in voluntary isolation and a rigorous and full analysis of project impacts on their lives. Methods proposed to mitigate social impacts on isolated peoples are deeply deficient, though it should be noted that improved mitigation methods would only partially reduce the substantial risks of serious social impact on isolated indigenous peoples presented by the Project. The Nanti, Nahua and Kirineri peoples will be affected to varying degrees and in different ways. The Camisea Gas Project repeatedly violates the indigenous people living in isolations' internationally recognized rights as human beings and indigenous peoples. Even though the companies may discourage contact it is extremely likely that during the 33 year period of implementation of the Project that contact will occur against the will of some of these groups. The boundaries of the Reserva del Estado al Favor de las Poblaciones Nativas Nomade Kugapakori y Nahua have not been respected by allowing gas exploration and extraction in the Reserve. Three of the four platforms and most of the seismic activity will take place in the Reserve. Respecting the boundaries of the Reserve and the rights of the isolated peoples would entail prohibiting development of three of the platforms (Cashirairi 1 & 3, San Martin 3) and reducing seismic exploration so that it will not take place in the Reserve. Finally, no independent oversight mechanism has been proposed to ensure adequate development of measures and strict compliance to company policies, codes of conduct and contingency plans related to indigenous peoples living in isolation.

Safety of Local Communities:
Local communities have never been exposed to an industrial project. Extreme care should be taken to safeguard their health and safety. During the workshops that were held in the area the local communities expressed a high level of understanding and concern over potential health and security risks. It is likely that the EIA consultation process contributed to this awareness. On the other hand, despite the thoroughness of the consultation analysis, the Project design and plans have not taken several major local concerns into account. The current design has the gas pipeline running precariously close to human populations and civil structures. Workers camps will present a significant intrusion on the local native population. They pose serious potential threats to the local peoples health and culture. Any relationship between the workers and the local communities could lead to negative social impacts.

II. INTRODUCTION

Peru's Camisea natural gas field (Block 88) and pipeline project will be constructed in one of the world's most environmentally and socially sensitive areas. A region of great biodiversity, Camisea is home to Machiguenga, Yine, Nanti, Nahua and possibly Kirineri peoples including indigenous populations living in voluntary isolation. Indigenous peoples in the project area are gravely concerned about the potential impacts of the project on their natural environments and their ability to live off their natural environment. Their livelihood is intimately linked to the natural forest and freshwater habitats of the eastern Andean foothills and Amazon River basin within which they live. Degradation or conversion of these natural habitats would significantly alter their livelihoods, health and way of live. For this reason, they have requested international assistance to review project-related environmental impact documents prepared for the consortium's two consortia, Pluspetrol (upstream) and TGP (downstream). The review strives to strengthen the local stakeholders efforts to guarantee that the serious impacts related to the project are addressed within the environmental management processes to be established.

The Cordillera of Vilcabamba and the Lower Urubamba Region are areas of global ecological importance. Conservation International has prioritized the Cordillera of Vilcabamba as one of twenty-five global "hotspots" for conservation because of its biological richness, high incidence of endemism and highly threatened status. World Wildlife Fund has designated the Southwestern Amazon, the Lower Urubamba located at its heart, as one of their "Global 200" ecoregions prioritized for conservation efforts because of its high biodiversity and globally important ecological functions. A rapid ecological assessment conducted by the Smithsonian Institution and Conservation International confirms that the Cordillera of Vilcabamba is a region of global biodiversity importance and recommends that gas pipelines be routed around, construction of roads be prohibited and immigration to the area be controlled. A series of biodiversity studies conducted in the Lower Urubamba region by the Smithsonian Institution states that few areas of the planet remain unexplored and intact, untouched by human activity and with their full complement of biodiversity like the Lower Urubamba. It goes on to state that the transitional forests of the Lower Urubamba are among the most biologically diverse in the world.

Given the highly sensitive social and ecological nature of these areas, the local stakeholders expect that processes and proposed safeguards meet at least the standards established by the previous Camisea consortium leader Royal Dutch Shell and by the World Bank. The original Environmental Impact Assessment (EIA) conducted by Shell Oil indicated that the Camisea gas field and pipeline project could cause the loss of food resources, loss of habitat and biodiversity, contamination of drinking water supplies and an increase in the incidence of sickness and disease. When Shell Oil conducted preliminary exploration in the region in the 1980's, 42% of the Nahua population died as a result of diseases contracted from loggers (Shepard, 1999: 38). Loggers used the seismic trails to penetrate deeply into the forest. Before eventually withdrawing from this project, Shell made a strong commitment to minimize the project's impacts on biodiversity and local communities in the region.

This review provides an independent assessment of the most significant potential environmental and social impacts of the Camisea natural gas field and pipeline project on the Urubamba River Valley. The assessment devotes particular attention to analyzing concerns raised by local indigenous peoples organizations and by national and international environmental and development organizations working to support indigenous peoples in the area.

The review was commissioned by the Consejo Machiguenga del Río Urubamba (COMARU), the Asociación Interétnica de Desarrollo de la Selva Peruana (AIDESEP) with support from the cooperating organizations - Amazon Watch, Oxfam America and the Centro para el Desarrollo del Indígena Amazónico (CEDIA). The technical review was conducted by an independent group of experts who worked closely with the Grupo de Interes and the local stakeholders to research, analyze and finalize this report. The technical experts included independent consultants in addition to voluntary input from experts from the following organizations - Racimos de Ungurahui, AIDESEP, World Wildlife Fund Peru, COMARU, CEDIA, Oxfam America, Peru Verde, ELAW Peru, and Amazon Watch.

The technical experts reviewed the current Environmental Impact Assessments, Environmental Management Plans, biodiversity assessments and other key project-related documents for both the upstream and downstream projects. These documents were compared with (a) similar documents prepared for the Shell-led Camisea consortium of 1996-98 and (b) relevant World Bank standards and (c) similar documents and current practice in the Bolivia/Brazil and Bolivia/Cuiaba pipeline projects, including the independent monitoring system, indigenous peoples development plan, environmental management plans, and programs to compensate for loss of biodiversity.

The preliminary analysis was presented, discussed and finalized during a series of workshops held with interested representatives of the indigenous communities of the Urubamba River Valley. This document presents brief project descriptions, the technical analysis, conclusions and desired outcomes. A great deal of time and effort was invested by many interested people and institutions to prepare this independent assessment and it is their sincere desire that the sponsors and managers of the Camisea Gas Project make use of the report to achieve the desired outcomes. The assessment will provide guidance to the community-based stakeholders for evaluating the Project implementers' practices and performance and ultimately, the impact of the Project on their lives and cultural survival.

III. PROJECT DESCRIPTIONS AND MAP
A. GAS TRANSPORT: DOWNSTREAM

The Project will be implemented by Transportadora de Gas del Peru (TGP) - a consortium of several companies: Pluspetrol (Argentina), Hunt Oil (USA), SK Corporation (Korea), Sonatrach (Algeria), G y M (Peru) and Tecgas (Argentina - chief operator of the Project and subsidiary of Techint). Three, thirty-three year, contracts were signed with the Government of Peru on the 9th of December, 2000: 1) a contract to build, own, operate and transfer (BOOT); 2) a contract for BOOT of liquid natural gas (LNG) via pipeline from Camisea (Las Malvinas) to the coast of Peru (Lurin) and 3) a contract for BOOT of distribution of natural gas via pipelines in Lima and Callao. TGP is responsible for the design, administration of goods and services, construction and operation of the system of gas transport, leasing of transport services and maintenance and repair of the system. The estimated cost of the Project is US $1.45 billion. The natural gas pipeline will be approximately 700 kilometers long and the "poliducto" to transport the LNG will be 650 kilometers. Both will begin at Las Malvinas in Camisea. The natural gas pipeline will end at the City Gate of Lima and the LNG pipeline will end at Pampa Clarita in Canete. The Project is designed to transport 250 million cubic feet of natural gas per day and 70,000 barrels of LNG per day. While, initial use will be for approximately 125 million cubic feet of natural gas per day, production can be expanded to 730 million cubic feet per day. The diameter of the natural gas pipeline will vary between 18", 24" and 32" and the diameter of the "poliducto" pipeline will vary between 14", 12 ¾", 10 ¾", and 8 5/8". Both pipelines will be buried along the entire route with the possible exception of the Acocro River crossing. The depth the pipelines will be buried will depend on the characteristics of the soil. For example at road crossings they will be buried 2 meters however throughout most of the route they will be buried at a depth of .6 to .9 meters. The pipelines will cross thirty steep valleys and rivers and the crossings will generally be constructed conventionally with the possible exception of the Urubamba and Apurimac Rivers, which may involve construction via guided horizontal perforations. The Acocro River may require an aerial crossing. A twenty-five meter right of way will be cleared for the pipeline with the exception of a possible reduction of 15 meters as it crosses through four ecologically sensitive areas (Vol. I R, pg. 64).

The Project will also include the following infrastructure as part of the transport system:

For transporting natural gas:

2 pressure control stations at kilometer 0 and kilometer 482

1 launching scraper pig in Las Malvinas and 1 receiving pig in Lurin and intermediary scraper pigs every 140 kms.

27 regulating valves, every 35 kms.

4 feeder pipelines to provide natural gas to generate electricity for the pumping stations for the LNG at kilometers 0, 70, 173 and 199.

For transporting LNG:

1 initial pumping station at kilometer 0.

3 intermediary pumping stations at kilometers 70, 173 and 199.

2 pressure reduction stations at kilometers 421 and 482.

1 launching scraper pig in Las Malvinas and 1 receiving pig in Pampa Clarita and 7 intermediary scraper pigs.

18 regulating valves and stations, approximately every 30 kilometers.

Other related infrastructure:

A SCADA system - a centrally controlled computerized system that monitors and alerts of changes in pressure throughout the pipeline system.

11 temporary camps occupying 40,000 - 60,000 m2 each one

Construction of access roads and improvement of existing roads (the EIA does not indicate where.)

Construction of heliports (the EIA does not indicate where.)
B. BLOCK 88 - EXPLORATION, EXTRACTION AND PROCESSING OF GAS: UPSTREAM
A consortium of companies comprised of Pluspetrol (Argentina - lead operator), Hunt Oil (USA), SK CORPORATION (Korea) and Hidrocarburos Andino S.A.C (Peru), will implement the Project. After following a legal tendering process the contract was awarded to these companies by the Peruvian Government on December 9, 2000. The contract stipulates that gas should be delivered to Lima by August 2004. The Project will involve developing four drilling sites on four existing platforms (San Martin 1 & 3, Cashirairi 1 & 3 - previously constructed by Shell Int.), the construction of a natural gas separation and condensation plant (plant and related facilities will occupy 72 has.) in Malvinas, installation and operation of pipelines from the platforms to the plant (64 kms.) and a 3D seismic survey of a 800 km2 area. The Project will be located in the Peruvian Amazon, near the Camisea River approximately 20 kms. from the right bank of the Urubamba River. The area is undeveloped and is recognized for its high biodiversity. There are native inhabitants in the area - some settled and others nomadic. A brief description of each component is as follows:

3D seismic survey:
Transport for seismic surveying will be done by helicopter. A base camp (2 has.) will be temporary and will be located in Malvinas near the Urubamba River with a capacity for 100 people which will include housing, offices, workshops, generator, heliport, river port and other related facilities. According to the EIA, three sub-bases will also be constructed temporarily in the area and will each cover approximately .05 has. Roaming camps, which accommodate 20 to 40 people, will be located temporarily at the sub-bases (primarily near the platforms) and other areas as needed, throughout the forest, occupying areas of approximately .04 has per camp. Receiver lines/trails (1.5 m. width) will be opened up North to South every 300 m. and source lines/trails (1.5 m. width) will be opened up East to West every 400 m. Drilling teams of approximately 20 people will drill blasting holes (3"x 15m.) and detonate explosives along the source lines with portable equipment. Recording teams of approximately 150 to 200 people will record results along receiver lines. The survey will also include 50 speed tests, which involve drilling and blasting at 60 m. depths throughout the area. One heliport (70 m. x 50 m.) will be constructed for every 4 km2 and 2.5 drop zones (6m. x 6m.) will be cleared and constructed for every km2. All lines, heliports and roaming camps will be cleaned, restored and revegetated.

Drilling construction and operations: San Martin 1 (SM1) & 3 (SM3) and Cashirairi 1 (CR1) & 3 (CR3):
It is projected that 21 wells will be developed in both fields - San Martin and Cashirairi. Initial development will include 12 wells. 4 gas injection wells are foreseen in the two fields for re-injection of gas. The EIA deals with the development of four drilling sites (clusters) on four existing platforms: San Martin 1 & 3 and Cashirairi 1 & 3. Clearings including the platforms will cover 1 to 3 hectares - sufficient space for the platform, dwellings, sludge pits, water storage, other waste, chemical and equipment treatment areas and storage and helicopter landing and take off. Roads will be constructed for transport between wells in a given field and will not be constructed externally. Heavy transport and drilling equipment will be transported by barge and/or helicopter to the site. Chemical substances used for drilling will be packed, transported and stored in pits on site. A closed circuit system of drainage and containment will be used during drilling operations. The previous drilling campaign did not help identify the best means for treatment of sludge and different problems were encountered therefore, options must be explored further for each of the sites. The depth of the wells will vary from 100 m. to 2,800 m. with diameters varying from 8 ½" to 26".

Malvinas Gas Treatment Plant:
The Plant will be located on the right bank of the Urubamba River, approximately 50 kilometers from the production fields. The Plant will include a water compressor facility where turbo expansion will cool, condense and ultimately separate the liquid natural gas (LNG) from the natural gas. The LNG will be stored in horizontal cylindrical tanks to be transported later via pipeline to Pampas Clarita. The Plant will initially produce 11.3 MMm3 per day and 165 m3 of LNG per hour eventually to be expanded to 22.6 MMm3 per day and 330 m3 of LNG per hour. It is estimated that the power plant will produce 140,000 HP by the year 2005. The installation will also include an airstrip (1,800 m.), heliport, jetty, roads, workshops, living quarters, fuel depot, ancillary services, fire fighting system, offices and a lighting system which will occupy 72 has. It is estimated that 500 people will be involved in the construction phase and 100 in the operation phase. Equipment and construction materials will be transported in by barge and sand and rock for construction will be obtained from the riverbank. The Plant will include the following units: liquid separator, condensate stabilization, dehydration by molecular screen and glycol system, cryogenics through turbo expansion, sales and injection compression, pumping installations and storage of LNG condensate and twelve general service units (torch venting system, fire fighting system, drainage and liquid waste treatment systems, electric power generation, hot oil system, fresh water system, compressed air system, fuel/lubricant storage, chemical injection system and diesel injection system).

Map of the Project Area


System of Gas and LNG Transport:
A gas tubing system constructed of carbon steel or a corrosion resistant alloy (Cr13 carbon steel) will be constructed along a 64 km. network to transport the gas from the clusters of wells to the Plant in Malvinas and includes a re-injection system that will re-inject gas from the Plant to the fields. A continuous injection system will be used to prevent corrosion in the duct system. The design includes three lines: gas, liquid gas and re-injected gas. The height of the collection system will vary between 425 and 650 meters. The lines will go from SM3 to SM1 and from CR3 to CR1 and after running an additional 6.1 to 14.7 kms. respectively, will couple at the main line, which will run 16.3 kms. to the Malvinas Plant. The outside diameter of the tubing will vary from the initial drilling site to the second site, the second site to the main line and the mainline to the Plant accordingly: 16", 20/24", 28" for the gas tubing, 4.5", 6.625", 8.625" for the liquid gas tubing and 8.625", 10.75" to 16" for the gas re-injection tubing. Maintenance of the line will include pigging, cleaning of drip trays, removal of liquids from the drainage sump and venting strainer, maintenance of actuators and duct valves, cathotic protection system, paint and vegetation along the right of way. Intelligent pigs will be installed at pipe junctures where the width changes, scrapers will be launched periodically and blocking and retention valves will be installed. The width of the right of way will be cleared to a maximum of 25 meters and the right of way will be kept clear of vegetation and used for transport of people and equipment and construction. Depth and width of the ditches where the tubes will be buried will vary and comply with ASME B31.8 Standards.

IV. ANALYSIS AND OBSERVATIONS
A. INDIGENOUS PEOPLE LIVING IN VOLUNTARY ISOLATION

1. Introduction:

The Camisea gas development project will impact three indigenous peoples known to be living in voluntary isolation within the Nahua Kugapakori Reserve in the Camisea region. Each of these peoples has their own distinctive identity, language, culture, socio-economic practices and geographic territories. Based on documentation by the NGO CEDIA, the Pluspetrol EIA states that there are 450 Nahua and 950 Kugapakori (Nanti) in the Reserve although figures are approximations (chap 4, pg. 35).

These different peoples and family groups engage in different degrees of contact, but all chose to live in isolation. Though many Nahua and Nanti people live in stable settlements and have regular contact with health workers, missionaries and anthropologists, their status is considered to be semi-contacted, as they continue to shun generalized contact with the outside world. Moreover, they continue to subsist almost entirely from natural resources found throughout their territory, and migrate seasonally to varying degrees to access the full range of resources needed for survival. Each will be affected in varying degrees and in different ways by gas development according to their location in the Reserve. Whether semi-contacted or uncontacted, all three isolated peoples will be affected by the Camisea gas project through the depletion of the natural resource base on which they depend for survival and through other impacts explored below.

The Nahua Kugapakori Reserve, created in 1989, covers 443,000 hectares. The Reserve was created to guarantee the territory of its isolated peoples Nanti and Nahua and to protect them from outside disturbance. The specific territories of each of the groups Nanti and Nahua were not demarcated separately within the Reserve. Even so, in accordance with ILO Convention 169 and the Law of Native Communities, these groups will get their own land titles once they fulfill the following two conditions: the development of a sedentary population or a pattern of seasonal migrations.

The Nahua (also known as Yora) are hunters and gatherers who live in the headwater regions of the Mishagua and Sepahua Rivers, the Lower Urubamba basin and along some tributaries of the Manu River in the Madre de Dios basin. The need to escape diseases and slavery that accompanied the early twentieth century Peruvian rubber boom concentrated Nahua populations around these remote headwaters. Though living in voluntary isolation, competition for natural resources brought many Nahua groups into contact with other indigenous peoples, loggers, traders and oil company representatives. After contact with logging workers, who used trails established by Shell's exploration crews in 1984, 42% of the population died of introduced respiratory diseases (Shepard, 1999: 38). Researchers estimate that between 220 and 250 semi-contacted Nahua people live in a settlement at the confluence of the Mishagua and Serjali rivers. Observers disagree about the presence of Nahua beyond the settlement, though some argue that a small number live in total isolation migrating around the Serjali and Caspajali headwaters within in the Nahua Kugapakori Reserve.

The Nanti settlements in the Upper River Camisea are of the Arawakan ethno linguistic group who migrated to the area in the 1950s after community conflicts in the Timpia region. Since the late 1980s, some Nanti individuals and families have come into gradual contact with other indigenous communities such as the Machiguenga, and more recently since the arrival of oil companies in the region, with a small number of missionaries, health and education workers and social scientists. By the mid 1990's, approximately 220 Nanti people settled in two communities Malanksiá (known as Marankiato to the Machiguenga) and Montetoni. According to some observers, a larger number of up to 600 individuals of semi-nomadic Nanti live in total isolation in numerous small family groups mainly on the Timpia and Ticumpinia rivers. Some investigators estimate that the total Nanti population reaches 800.

While researchers disagree as to their number and origin, the Kirineri people are thought to live in total isolation on the upper Paquiria and Serjali rivers. (It should be noted that the term "Kirineri" is a Machiguenga misnomer meaning 'assassins' or 'savages'.) The Kirineri are not Nanti. They are often erroneously referred to as "Kugapakori" (Nanti). Limited knowledge suggests that they are a distinct Arawakan people possibly of Machiguenga origin who number around 200 individuals. There is evidence to suggest that the Kirineri have been present in the region for decades, and some individuals have had sporadic contact with Machiguenga communities. In addition, investigators speculate that there are small groups of Machiguenga and/or Nanti peoples living in total isolation in the Megantoni reserve region between the Timpía and Ticumpinia Rivers.

Camisea's semi-contacted and uncontacted peoples currently control the extent and nature of their interaction with the outside world and chose to keep contact to a minimum. The issue of control over contact is all-important. All cultures change and evolve - isolated peoples are not 'pre-modern' cultures 'frozen in time'. They are not passive 'victims' of wider forces. Able to shape their own participation in wider society and the economy, peoples in voluntary isolation actively manage the pace of change within their cultures.

While they subsist almost entirely from the forest, some Nahua and Nanti engage in the market economy by voluntarily trading forest goods to acquire medicines, outboard motors and other products. The acquisition of non-indigenous products can strengthen their social and economic position vis-à-vis the outside world and should not alone be interpreted as dissolution of 'tradition'.

However, for both semi-contacted and uncontacted peoples, when the outside world begins to intrude aggressively upon their territories and reduce their natural resource base, the pace of socio-economic and cultural change spins out of control leaving isolated peoples suffering the effects of cultural dislocation and visible social problems such as introduced illnesses and malnutrition.

It is clear that the Camisea Gas Project will bring factors into play that will set off such consequences. At the root of any analysis of the social impacts of the Project lies the question of the unequal distribution of political power and economic resources between multinational energy companies, the Peruvian government and indigenous peoples living in voluntary isolation. These peoples are excluded from the nation's political processes. State presence in their lives is non-existent. The political and economic influence of the energy companies driving the Camisea Project forward is immense.

Despite their remote location, such peoples are part of the wider political and economic dynamic that shapes the Camisea region and the Peruvian and global economies. Outsiders - missionaries, teachers, health workers- who engage with isolated peoples all too frequently seek to use them as a political football to advance their own distinctive agenda. The fundamental inequalities underlying isolated peoples' experiences of this wider dynamic are exacerbated by the presence of energy companies. When debating the price of their forest products with local mestizos, individuals from indigenous groups in initial contact are often at a disadvantage due to their lack of fluency in Spanish and inexperience with a currency based economy. Due to their lack of understanding of western concepts related to industrial development, land rights, resource rights, when debating the impacts of the Camisea Gas Project with company representatives, this power disparity is magnified.

Analysis of the social impacts of the Camisea Gas Project on peoples living in voluntary isolation contained within the Environmental Impact Assessments of both Pluspetrol Peru SA and Transportadora de Gas de Peru is grounded in this pervasive imbalance of power. Deficiencies within both EIAs in assessing and addressing the potential impacts of the upstream and downstream gas operations on the isolated peoples of the region, breaches their human and indigenous rights as laid out in international law.
2. International Legal Agreements on Indigenous Rights:

As regards the historical rights of semi-contacted and uncontacted indigenous peoples, the International Labour Organisation (ILO) has one binding instrument focusing exclusively on indigenous rights, Convention 169 of 1989 . A comprehensive and progressive draft UN Declaration on the Rights of Indigenous Peoples is presently under discussion by the UN Human Rights Commission. The draft Declaration has yet to be ratified but in summary, establishes that indigenous peoples can legally assert their rights to live according to their own cultures and maintain their ways of life; to full participation in decision-making; to free and informed consent; to apply and enforce customary law; to represent themselves through their own traditional authorities and institutions; to own, control and manage ancestral communal lands (see section B2 for further discussion of international legal recognition of indigenous rights).

However, international legislation does not address all the unique rights of semi-contacted and uncontacted peoples. In recognition of this fact, other actors have developed policies to protect the rights of uncontacted peoples, particularly in Brazil. The Brazilian government indigenous affairs agency FUNAI founded federal and state departments that focus exclusively on uncontacted peoples issues. A decade of policy analysis within FUNAI led to the adoption in the 1990s of an isolated peoples' policy grounded in the principal of 'no forced contact'. In recognition of isolated peoples wishes and as a result of a series of cases of 'forced contact' which ended in fatalities amongst isolated groups through sickness and conflict, FUNAI now actively prevents outside actors from seeking contact with semi-contacted and uncontacted peoples.

The Colombian government has also taken unique steps to protect the rights of semi-contacted and uncontacted peoples by creating permanent protection zone covering the ancestral lands of the Nukak Maku people of the Amazon Region.

Debate on semi-contacted and uncontacted peoples' rights within the Peruvian government is nascent. However, in its work to defend the rights of indigenous peoples in the Madre de Dios department, the Peruvian indigenous organization FENAMAD has developed internationally acclaimed policies on semi-contacted and uncontacted peoples' rights. (In 1997 FENAMAD was awarded the Bartolome de las Casas prize for its work with semi-contacted and uncontacted peoples threatened by oil development on their lands by the Mobil, Exxon y Elf consortium). FENAMAD bases its policy on recognition of the inalienable right of semi-contacted and uncontacted peoples to remain without contact. The fundamental right of such peoples to define and chose the terms and extent of contact is clearly established. FENAMAD advocates a policy of 'no forced contact' meaning that any contact must be initiated by such peoples. FENAMAD establishes that:

"el contacto de foráneos con estos pueblos significaría un grave atentado contra el derecho fundamental a la salud, identidad cultural, integridad moral, su libre desarrollo y bienestar, y a la posesión sobre la tierra de estos pueblos al someterlos a condiciones que afectarían sus derechos posibilitando su extinción definitiva como individuos y como pueblo indígena con una identidad cultural propia."

("contact by outsiders with these peoples would constitute a serious threat to their fundamental right to health, cultural identity, moral integrity, control over development, well-being and possession of land by subjecting them to conditions that would affect their rights and make possible their extinction as individuals and as indigenous peoples with their own cultural identity.")
3. Analysis of the Pluspetrol's Social Impact Study:

Poor Baseline Data and Methodology
World Bank Indigenous Peoples Policy (OD 4.20) specifies that adequate baseline studies must be carried out to identify key indigenous issues and concerns at the project identification stage. Baseline data of ERM's Social Impact Study (EIS) on peoples living in voluntary isolation is insufficient, partly due to weak data acquisition methodologies. There is a glaring difference between the relatively extensive quantity of data accumulated for the baseline study of main river Machiguenga communities and data on peoples living in voluntary isolation.

The study recognizes the existence of peoples living in voluntary isolation in the Camisea area. A short history of the Nanti people and some information on their natural resource use is given. Reference is made to Nahua peoples living near the mouth of the Serjali River and to "nomad groups" living both within and outside "the State Reserve for Nahua and Kugapakori" (chap 4, pg 22). Their lifestyle is briefly described as "in a state of equilibrium with their hill forest"(chap 4, pg 30).

Recognition is also given to the existence of "several nomad groups in relative isolation with little or early contact" who are assumed to be Machiguenga (chap 4, pg 21). However the short discussion of the Megantoni Sanctuary makes no reference to the isolated Machiguenga peoples who almost certainly live there (chap 4, pg 31).

To improve its data acquisition for the baseline study, Pluspetrol could have tapped into the body of knowledge about the Reserve's isolated peoples that exists amongst local experts, NGOs and social scientists. It should be noted that helicopter flights over semi-contacted and uncontacted peoples' settlements (conducted by Pluspetrol according to local witnesses) are not an accurate means of estimating population sizes or land use patterns. Furthermore, such flights have the effect of terrifying and dispersing isolated groups.

Contrary to FENAMAD's recommendations on semi-contacted and uncontacted peoples, Pluspetrol admits that company representatives entered the Nanti communities of Montetoni and Malanksiá to conduct interviews. This action clearly counters established 'no forced contact' policies for such peoples. While these two Nanti settlements have some links with outsiders through sporadic visits from health workers and social scientists, their desire to remain in isolation is evidenced by their own practice of not initiating contact except in rare cases for trade purposes. The threats that such visits pose are outlined in FENAMAD's statement above.

In addition, it appears that the interviews in the Nanti communities were conducted without a methodology to guide engagement with isolated people. No methodology is in evidence to address the potential for incomplete and flawed communication between culturally immensurable parties unequally positioned within resource hierarchies who use mutually incompatible and unintelligible socio-linguistic frameworks of reference and conceptual norms. The use of inexpert Machiguenga translators would also have contributed to flawed communication. The Machiguenga and Nanti languages are similar, but not identical. As a result, the possibility of misunderstanding is high particularly during discussion of concepts related to energy development that are alien to one or both cultures. The potential for miscommunication in such contact situations reinforces the need for a policy of 'no forced contact'.

The deficiencies in the baseline study for semi-contacted and uncontacted peoples partly explain the EIA's ensuing failure to adequately identify and mitigate project impacts on them.

Inadequate Framework for Stakeholder Consultation and Participation:
It is imperative for any energy company engaged in resource extraction to involve all affected persons and groups in all stages of the project, a principle enshrined throughout ILO Convention 169. Special attention should be given to stakeholders who are most vulnerable to project impacts. Article 7 of ILO 169 refers to indigenous peoples' rights to "participate in the formulation, implementation and evaluation of plans and programs for national and regional development which may affect them directly."

Participation should be proactive and meaningful allowing groups a genuine influence on the decision-making process. According to World Bank OD 4.20, meaningful participation demands a "mechanism" for indigenous involvement in project planning and implementation.

No evidence is given in the Social Impact Study of any participation of indigenous groups in initial contact in the Camisea gas project decision-making processes. Although visits were made to Nanti communities, no participative mechanism is identified. There is no report of the comments and opinions of the Nanti people on the project and their contribution appears not to have been integrated into any phase of project development. The lack of information about how the interviews with the Nanti were conducted implies a lack of transparency on the companies' behalf and casts further doubts over methodologies for engagement.

As forced contact is not recommended it is impossible for the semi-contacted and uncontacted peoples of the Nahua-Kugapakori Reserve to participate in any way in the formulation, implementation and evaluation of plans and programs for the Camisea Gas Project. As such, the government should protect these populations by not allowing industrial activities in the Reserve that was created to protect them from this very type of premature contact.

Deficient Assessment of Social Impacts:
The EIS for the upstream project focuses its impact assessment almost entirely on main river Machiguenga communities. Mostly impacts are assessed village by village and not generally for the culture or way of life of the lower Urubamba indigenous groups. It correctly identifies numerous damaging impacts on their lives as a result of the project including reduced game and fish supplies, contaminated water supplies, colonization, strain on inadequate local infrastructure, increased social conflict, delinquency and prostitution.

Assessment of project impacts on isolated peoples however, is incomplete. Estimated levels of influence establish in the EIA include direct, indirect and potential. The report underestimates the level of impact by stating that seismic testing will "potentially influence the Nanti Montetoni and Marankiato communities." This assessment also ignores direct and indirect impact on the nomadic populations not living in the two settlements who roam the Nahua / Kugapakori Reserve. The Reserve which includes the majority of block 88 and its nomadic populations are more likely to be directly influenced by production wells, flow lines, explosions and related seismic activities, and all air and river traffic along the Camisea river which is the principal river in the Reserve. The report states "those that can be potentially affected include...groups of native nomads within the Nahua-Kugapakori," but the nature of influence on these peoples is not stipulated (chap 4, pg 4).

Initial recognition of the "potential impacts" and "indirect impacts" on peoples in isolation is not developed as the analysis progresses. Only three project impacts on isolated indigenous peoples are contemplated:

· Brief mention is given to isolated communities in a discussion of the likely spread of timber dealers away from Sepahua into the Nahua-Kugapakori reserve. It is stated, "this could cause land conflicts in the event that timber dealers invade private lands and protected areas such as Nahua-Kugapakori Reserve" (chap 4, pg 116). The effect of the trauma of conflict on peoples is not considered.

· The likelihood of contamination of the river systems in the area resulting in reduced fish supply and increased malnutrition is considered, but no direct reference is made to the ensuing impact on semi-nomadic isolated peoples who may fish in the rivers (chap 4, pg 117).

· The study acknowledges that workers engaged in seismic prospecting activities in remote areas could come into contact with isolated peoples. It is stated that in such cases "contingency measures" must be taken (chap 4, pg 116). Pluspetrol has defined a contingency plan but lack of independent monitoring and oversight weaken the potential effectiveness of the plan. It cannot be assumed that the plan will effectively prevent harmful impacts like the spread of introduced diseases that could prove fatal for the isolated populations.

It is not clear why the more comprehensive analysis of impacts on main river Machiguenga communities was not extended to include direct and indirect impacts on indigenous peoples living in voluntary isolation. Identification of impacts on main river communities should have been amplified to include consideration of the associated effects on isolated peoples. Mounting pressures on the resource base of main river communities will force the growing main river population to seek resources found in isolated peoples' lands. Taking into account these associated affects, the Camisea Gas Project will influence the lives of the region's isolated indigenous peoples. Different groups and individuals will to varying degrees experience some or all of the following impacts that are related to their health, cultural integrity, and physical survival:

· increased presence within their lands of company workers, colonists, loggers and members of other indigenous groups possibly resulting in conflict over land and forest resources and in some cases violent conflict and even incidence of deadly assault
· poorer nutritional intake due to shrinkage of their natural resource base on which they almost wholly depend for subsistence due to the rise in local population and noise from passing helicopters and explosions for seismic testing scaring away game
· the need to acquire sources of monetary income for food and medicine possibly from greater involvement in market "cash" economy
· reduction in fauna and flora limits access to food, ceremonial and medicinal resources and building materials and work tools
· more introduced illnesses resulting in death, poorer health and increased reliance on non-traditional medicines
· poorer health due to drinking and bathing in river water contaminated by industrial waste and soil erosion
· cultural and social disintegration, depression, retreat from traditional grounds, and fear based decision making

By setting in motion these health impacts, the Camisea Gas Project violates a number of international agreements and poses a number of threats to internationally recognized indigenous rights.
B. OTHER SOCIAL IMPACTS
1. Introduction:

The Camisea Gas Project may impact the lives of approximately 7,000 people living in 42 communities in the Lower Urubamba region in addition to an estimated 500 to 1,500 indigenous people living in isolation and approximately 20,500 people living in 60 communities in the Upper Urubamba region. The potential negative impacts to indigenous people living in isolation have been discussed in the previous section. There are additional potential negative impacts that may affect all people who live within the direct and indirect areas of influence of the Project - the Urubamba River Valley.

The ERM EIA documents that there are six different ethnic groups in the Lower Urubamba area - 5 of them indigenous to the area. Of the indigenous there are approximately 4,800 of the Machiguenga group, 700 of the Yine group, 700 of the Ashininka group and between 500 and 1,500 of the groups living in isolation - the Nanti (Kugakaporis) and Nahua. There are estimated to be approximately 800 people of mestizo (mixed) origin on the Lower Urubamba. Socio-economic welfare indicators show that most people in the area live below the poverty level. The indicators show that the local population is worse off than most Latin Americans. The infant mortality rate is 126 out of 1,000. The average life expectancy is approximately 50 years of age. Thirty percent of the population above 15 years of age are illiterate. Per capita income is estimated at US $60 per year.

The indigenous population has lived in the area for thousands of years and subsist off of their natural environment - forests and their related aquatic river system, in a sustainable manner. They realize that their survival depends on the health of the ecosystems within which they live. They subsist from maintaining small-scale agriculture plots on the edge of the forest, hunting, fishing and extraction of non-timber products such as fruits and nuts and medicinal products. Like many indigenous groups they realize the importance of living in harmony with their environment and have a reverent and spiritual relationship with their natural surroundings expressed in traditional ceremonies and sustainable practices .

However, the indigenous peoples who live in settled communities also participate in the local, regional and national political system and have been influenced by people who have migrated to area - most notably missionaries, a few government service providers and mestizo agricultural settlers, oil companies, timber industry workers and traders. They interact in a market economy, which supplements the goods available from their natural environment. They are not isolated from the surrounding world yet they have managed to maintain their unique cultures and traditions. Their political influence is not as strong as most social actors in Peru and for this reason they are organized into representative organizations that advocate for their rights - COMARU and CECONAMA . Despite their efforts to organize themselves they are often at a disadvantage in representing their interests. They have lost out in the past to more powerful interests such as large companies interested in exploiting their natural resources, i.e., timber and oil extraction. Peruvian law favors hydrocarbon activities over conservation of communal lands and protected areas. It stands to reason that they are also at a disadvantage in successfully advocating for their interests with the sponsors of the Camisea Gas Project. Tactics to divide and weaken local indigenous organizations have also been used by powerful interests to weaken efforts to advocate for local rights.

The supporters of the Camisea Gas Project profess that the Project will improve the economy of Peru. It is hoped that the socio-economic well-being of the people of Peru will improve - an indirect positive impact of the income from the sale of gas products. It also stands to reason that the people who are hosting the Project on their lands should be among those who realize socio-economic benefits from the Project. They certainly should not have to bear the burden of any of the costs. Care must be taken to plan and implement the Project in a manner that does not make the local people worse off. Conserving and safeguarding the natural environment is critical for maintaining the well-being of the local people. It is also very important to respect and maintain cultural traditions as well as traditional leadership and organization that have been the key to the survival of these people over time. Social welfare indicators should improve not decline.
2. Best Practices and International Standards:

Indigenous peoples seeking to affirm their human rights have recourse to a number of widely ratified international legal instruments such as the Universal Declaration of Human Rights, the Convention on the Elimination of Racial Discrimination, the Convention on the Prevention and Punishment of the Crime of Genocide and the International Human Rights Covenants - the International Covenant of Civil and Political Rights and the International Covenant of Economic, Social and Cultural Rights - in which universal human rights are defined "without distinction as to race, sex, language or religion".

As regards their historical rights as indigenous peoples, the International Labour Organisation (ILO) has a binding instrument focusing exclusively on indigenous rights - Convention 169 of 1989. Rights laid out in the above international agreements and other rights defined through debate at the UN Working Group on Indigenous Populations have been incorporated into a draft UN Declaration on the Rights of Indigenous Peoples, which is presently under discussion by the UN Human Rights Commission. The draft Declaration has yet to be ratified, yet it is already referred to as the most comprehensive and progressive statement of indigenous rights to date. A similar declaration is also in discussion at the continental level at the Organization of American States.

International conventions and agreements on indigenous peoples in summary advocate for indigenous peoples to legally assert their rights to live according to their own cultures and maintain their ways of life; to full participation in decision-making; to free and informed consent; to apply and enforce customary law; to represent themselves through own traditional authorities and institutions; to own, control and manage ancestral communal lands. World Bank Operational Directive 4.20 (WB O.D. 4.20) basically enforces the implementation of these principles in World Bank funded projects. The international conventions sited and the World Bank's policy for indigenous peoples (O.P. 4.20) would apply to the majority of the people who live in the area.

These conventions and standards imply that developers should respect the rights of indigenous peoples to maintain their traditions, cultures, and traditional decision-making and organizational structures. The project developers are obliged to fully inform local indigenous people of any potential short or long-term, direct or indirect impacts that might affect them in any way. Once the local groups are fully informed they have the right to participate in decisions regarding the Project that might affect them. WB O.D. 4.20 goes a step further to require the preparation and implementation of indigenous peoples development plans (IPDP) to address any adverse impacts and help ensure that indigenous peoples benefit from the project. Such plans usually include legal establishment of land rights where traditional access to natural resources may be at risk and economic and social development activities to ensure that local peoples are benefited and not harmed by the project.

Although local consultations were held with the local communities as part of the EIA process the local indigenous groups do not feel as though they have been informed adequately regarding the Project. They also don't feel as though they have been involved in decision-making over issues that might affect them. These opinions were expressed to the Independent Assessment Coordinator when she visited Peru in February and met with a number of stakeholders - local communities and non-governmental organizations. The period for review and public comment on the thousands of pages of the EIAs was not sufficient. COMARU received the full Pluspetrol EIA documents on November 17th, 2001 and the public comment period was completed on December 21st, 2001. The license was issued on December 17, four days ahead of the close of the public comment period. The TGP license was issued March 4th, 2002. When the Independent Assessment Coordinator held workshops in the Urubamba Region in mid-February it was clear that very few local stakeholders or interested NGOs had time to analyze and interpret the EIAs for comment. Very few written comments were received.

The Community Relations Plans (CRP) are in the stage of development. At this point it appears as though the main objective of the community relations personnel is to negotiate compensation amounts, community by community, that will ensure that the companies gain legal access for the gas pipeline right of way, related infrastructure and exploration and extraction activities in Block 88. The native communities expressed to the Independent Assessment Coordinator their concern that the present negotiations would be their only opportunity to be compensated for negative impacts. During the months of February and March three different companies - Pluspetrol, TGP and Techint, were pressuring individual communities to sign compensation agreements. The process, calculations, legal and technical documents of each of the companies differ and are complex. The negotiations have overwhelmed the native communities creating a confused, stressful and competitive environment. The communities are unprepared to respond to the western negotiation tactics of the company lawyers and negotiators who have visited the communities and lack adequate technical and legal assistance to make informed decisions. The negotiation process is completely inappropriate and unjust. The companies have dictated the terms of negotiation and the communities feel pressured to respond even though they are unclear about the terms or the adequacy of the company's proposals.

The Coordinator witnessed a compensation negotiation meeting in the Machiguenga community of Chokoriari (Ticumpinia), during her visit to the area. TGP had come to the community for the afternoon to negotiate and settle on a compensation amount for the 15 kilometers right of way that will pass through their native lands. TGP was assisted by a government agency and had arrived at an amount of approximately US $3,000 using complicated calculations. The community was told to unite a quorum of two thirds and once the quorum was present, were told to select a small negotiating delegation to negotiate and fly in the helicopter that same afternoon to sign an agreement in the city of Quillabamba. Once the community President selected the negotiation commission, the rest of the community left and did not participate. The commission brought up some of their concerns to the TGP personnel about the impacts and were assured that everything would be addressed. The commission was clearly not comfortable with the proposal and were uneasy about the process. They were not pleased that their questions were not addressed adequately. Noting the unease and confusion the company officials left the commission to discuss matters between them briefly. The commission was unsure about what to do. The Coordinator asked them if they understood the terms and they said no. The Coordinator then advised them they had the right to ask for adequate time to analyze the situation and make a decision. The company was then told that they would need more time. The company representatives responded by threatening the community that if they didn't decide soon, the government would intervene and decide the compensation amounts, which would surely be less that what the company was offering. In this particular instance, it was very clear that the companies were not willing to take the time and effort to enter into a meaningful consultation process that would address the concerns of the community. The company representatives flew away in the helicopter telling the community to inform them when they were ready to negotiate. The process disregarded the community's concerns, their manner of discussion and decision-making and was dictated by the company's terms. It was highly inappropriate and violated the community's basic rights to full participation in decisions that affect them and to free and informed consent.

Also during the Coordinator's trip she was shown copies of Pluspetrol's compensation contract and an extremely complex technical analysis for calculating compensation that only lawyers and environmental economists could understand. Several community leaders approached the Coordinator and requested an explanation of the technical documents. The Coordinator was also shown a letter of agreement between Techint and the community of Chokoriari for the use of two hectares for a workers camp. This document had clauses that would obligate the community to do things that had not been brought to the community's attention and they had not noticed. These documents and the communities' perception of the process as expressed to the Coordinator during her visit underline the fact that their rights to free and informed consent have and will continue to be violated unless significant changes are made.
3. Observations: Environmental Impact Assessments, Environmental Management Plans and Community Relations Plans:

As part of this analysis the Coordinator traveled to the area and analyzed the EIAs with the local communities. Among the local population and other stakeholders there was very little knowledge and understanding of the EIAs and the proposed environmental management plans (EMPs). The Coordinator observed that there was general confusion about Project plans and company representation. The fact, that several communities have had contact with so many Project related actors - ERM, Walsh, Pro Naturaleza, Pluspetrol, TGP and Techint, has served to maintain a state of confusion. Despite confusion over the characteristics of the Project, most stakeholders had a very good sense for the potential negative impacts and benefits. However, due to the confusion and the different sources of information and contacts the local stakeholders expressed to the Coordinator that they have not been able to influence decisions related to the Project. During TGP's meeting in Chokoriari (Ticumpinia) the community members had some very astute questions. The fact that the TGP representatives answers did not attempt to address their concerns directly generated a lack of trust between the Project sponsors and the community. It is vital that the companies take greater care to listen and respond to community concerns. If the relationships continue along this vain it will lead to significant mistrust and possibly conflicts that will hinder the success of the Project.

At the current time there is no coherent mechanism for enabling effective consultation and participation in decision-making over key issues that may affect the communities. It is very important that such a mechanism be defined and established immediately. The communities find it very difficult to have multiple integrated issues related to the Project addressed in different ways by the different companies. It would be much more effective if the companies could agree on working with the communities together. The current method of communication and discussion appears haphazard and serves to confuse and undermine local traditional leadership. Local leaders are expected to make sense of this confusion and represent their communities effectively. Under the current conditions they can't and it serves to erode the communities' confidence in their leaders.

Negative Impacts:
The EIAs and EMPs address almost exclusively direct impacts. Some attention in the analysis is given to induced impacts in Pluspetrol's EIA (Environmental Impact Matrices, Chapter V and parts of the EMP, Chapter VI where it discusses measures to prevent and mitigate health threats and re-establish vegetation) however, in the EMPs and in the current compensation deals being negotiated with the communities, inadequate attention has been given to induced impacts. The local stakeholders greatest concerns are primarily related to induced, indirect impacts.

During the series of workshops that the Independent Assessment Team conducted in Urubamba, the Machiguenga communities identified improved access to their area as the biggest concern. None of the mitigation measures address this issue effectively. To some extent Pluspetrol's plan to only construct roads near the platforms within Block 88 and references to plans to control access with the communities and re-establish vegetation attempt to address this issue. However, if you analyze the two components of the Camisea Gas Project together it is apparent the gas pipeline right of way (ROW) and related improved roads and access roads combined with seismic trails and feeder pipeline networks will open up access to the Lower Urubamba Region. Currently, Lower Urubamba is protected from an influx of colonization by natural barriers - the Pongo of Manique to the south, the Cordillera of Vilcabamba to the west and dense rainforests to the east. Natural barriers do not protect the Upper Urubamba and the area over the last several years has been severely damaged by deforestation and erosion, as well as plagued by conflicts between new settlers and the local indigenous communities. The Machiguenga people have already experienced colonization pressures in Upper Urubamba and mentioned to the Independent Assessment Coordinator that the improved roads, temporary access roads and ROW will increase access in Upper Urubamba and open up access to the Lower Urubamba. The TGP EMP does not include measures to control access. The Pluspetrol EMP (Chapter VI) mentions the intention to control access but doesn't define mechanisms.

Another significant induced impact issue is the introduction and increase of health problems in the area. Both EIAs identify this as a potential problem and the EMPs propose to address the health of workers - not necessarily the potential negative impacts on local communities. Pluspetrol's plans refer to the possibility of mitigating potential health problems via preventive measures with personnel (Chapter IV, pgs. 150 & 151). TGP's plan does not exclude this possibility but does not define possible solutions in their EIA. If stronger preventative and curative health measures are not implemented for the benefit of the local communities there is significant risk that the incidence of illness and mortality rates will increase.

Other negative impact issues include the reduction of wildlife, including aquatic life, which are staples for the local people's diet. Especially during the construction phase, the movement of equipment, barges, people, seismic explosions, clearing of the forest and damming of rivers, will negatively affect the normal abundance of wildlife. The EMPs propose measures to minimize disturbance and control hunting among personnel but do not propose effective measures for compensating for this void in the local peoples livelihood. Locally, there are no substitutes for these elements in their diet and there will be negative impacts on diet and nutrition.

During the Independent Assessment workshops the Machiguenga people stated several times that they do not think money will resolve the negative impacts. They have seen the negative influence of money in their communities. They are afraid their leaders will be corrupted by it. They explained that they have seen young men who have benefited from Shell sponsored employment and scholarships that have exposed their young people to a different culture. They claim that these young people abandon their communities and become involved in a material lifestyle that is foreign to them and certainly, not beneficial to the communities.

They also stated they are concerned about the different values that will be introduced to their communities by the workers who come to work on the Project and the increase in commercial activity and outside traders. Their communities now have very low rates of sexually transmitted disease and no problems with alcohol, crime and prostitution. In addition to changes in values they are concerned about increases in disease and negative impacts on their health.

Some of the communities mentioned they are concerned that the pipeline will pass extremely close to their populations. In the community of Shimaa it will pass within 100 meters of the community school and 50 meters from a house. It will also cut a 25 meter swath of six kilometers through a forest of Kapashi palms, which is essential for roofing their houses. In Chokoriari (Tucumpinia) it passes within 1 kilometer from the community. In addition, TGP is planning on locating a storage yard and machinery camp several hundred meters from the houses of the community.

The Project is in the beginning stages and the local people have already experienced negative impacts from the Project. The manner in which the companies are pressuring communities to sign compensation agreements to gain right of way has served to divide communities and leaders and has begun to generate suspicion and mistrust between community leaders and community members. The communities mentioned that they do not trust the companies and relationships are deteriorating. If the companies hope to succeed in implementation they will have to change significantly and work actively to improve the quality of their relationships with the communities.

The communities are very aware of the excellent quality of the environment in which they live and depend. They are concerned that contamination and erosion be controlled and that accidents are prevented. Contamination, erosion and/or accidents would have significant negative impacts on the local communities' livelihoods.

Benefits:

During the workshops the participants were asked to explain potential benefits of the Project. When asked to describe benefits they couldn't think of any. The Project's presence is of great concern to them. They are very aware that it will change their way of life forever. They want to improve their quality of living and welcome programs to improve their social development and conservation of their natural resources. They do not oppose development. They want to be able to influence development so it will occur in a way that is beneficial not harmful. They don't feel as though they can influence the Project and outcomes resulting from the Project. Their experience with the Project to date has not been positive.
C. BIODIVERSITY IMPACTS
1. Introduction:

The exploration, extraction and processing of gas in Block 88 in Camisea located in the Lower Urubamba Region, and the construction of the first 100 kilometers of the gas pipeline crossing the Cordillera of Vilcabamba, will occur in areas of globally outstanding biodiversity. Conservation International has prioritized the Cordillera of Vilcabamba as one of twenty-five global "hotspots" for conservation because of its biological richness, high incidence of endemism and highly threatened conservation status . World Wildlife Fund has designated the Southwestern Amazon, the Lower Urubamba located at its heart, as one of their "Global 200" ecoregions prioritized for conservation efforts because of its high biodiversity and globally important ecological functions .

The Lower Urubamba Region is part of the Southwest Amazon Ecoregion, which is extraordinary for its biodiversity because it has been influenced by the flora and fauna from three distinct regions - the Amazon Basin, the Andes Mountains and the Bolivian Savannahs. The Southwest Amazon also provides critical regional and global ecological functions as its expansive forests and complex system of rivers nestled along the eastern slope of the Andes Mountains regulate climate and rainfall - providing water to the Amazon Basin. Biodiversity studies conducted in the area as early as 1988 and as recently as 2001 show that the Amazonian forests along the foothills of the eastern Andes are among the most species rich areas in the world (Gentry 1988, 1990; Foster1990; Gentry and Terborgh 1990; Foster et al.1994; Wilson and Sandoval 1996). The Smithsonian Institution has done extensive ecological studies in the Lower Urubamba Region identifying 747 species of flora and fauna verifying its rich biodiversity. Hafer (1969) believed that during the Pleistocene, climatic conditions in the Amazon Basin changed causing the forest to retreat into smaller remnants surrounded by savannas. It is believed that the Lower Urubamba Region could have been a forest refuge during this period - partially accounting for the very high biodiversity .

The Environmental Impact Assessment conducted by ERM Peru estimates that 90 % of the 170,000 hectares of Block 88 are primary forests in a pristine state of conservation. There are fourteen distinct habitats in the area including variations of upland and lowland tropical moist forests, pre-montane forests, and bamboo forests. The ERM report explains that the state of conservation is so extraordinary that wildlife species endangered or threatened in other parts of the world are found in healthy populations in Block 88. The presence of 90 % of the wildlife species that are expected to live in the area was verified during the one-month field survey period. Six of the ten species known to be endemic to the area were found. Twenty-six species known to be endangered or threatened, according to CITES lists and the IUCN are found in Block 88.

The Cordillera of Vilcabamba is located in the Tropical Andes covering an area of approximately three million hectares of which 1,699,300 has been set aside by the Peruvian government as the Zona Reservada de Apurimac, temporarily protecting the area until its permanently classified. The area is just as important as the Amazon in terms of its species diversity and high levels of endemism. In fact, Conservation International has ranked the Tropical Andes as the "hotspot" with the highest percentage of endemic plants and vertebrate species in the world. Conservation International also believes that the Tropical Andes is one of the most threatened areas in the tropics due to settlement and conversion to agriculture and to some extent mining. The Andes contains only 25% of its original forest cover and only 25% of its current forests are under protection .

Despite the extraordinary biodiversity found in this part of Peru the Peruvian government's position on and commitment to preserving this biodiversity is unclear. It is not clear how government agencies responsible for the environment relate to the oversight provided by the Ministry of Energy and Mines

Much of the western slope of the Cordillera of Vilcabamba has already been degraded and deforested. Due to difficult access the upper ridges and eastern slope are still in an excellent state of conservation with the eastern slopes containing a significant piece of the original forest. These forests are critical to the healthy functioning of not only ecoregions in highland and lowland Peru but also a large part of South America. The Cordillera protects the headwaters of many rivers maintaining clean and plentiful water to the lowland forests and the inhabitants that live there. The steep slopes and isolation of the Cordillera de Vilcabamba have created the setting for the evolution of a high number of plant and animal species, many of which are found no where else on earth. It is planned that the gas pipeline will traverse approximately 100 km. of the Cordillera de Vilcabamba mostly along the eastern slope.

A rapid ecological assessment conducted by the Smithsonian Institution and Conservation International of the Cordillera de Vilcabamba confirmed the high levels of endemism and species richness and the excellent state of conservation along the top ridges and eastern slope of the Cordillera. In the report they conclude that the Cordillera de Vilcabamba is a region of high global biodiversity importance, deserving of conservation efforts and protection, and support the proposal put forward by local groups to establish two communal reserves and a national park. They also encourage the linking of these areas to other protected areas by establishing biodiversity corridors. The report goes on to state that conservation priorities in the region include protecting the outlying ridges to sustain rare and local bird species, protecting areas above 1,400 meters to ensure conservation of high habitat heterogeneity and to provide a refuge for mammals, protecting the watershed services of the Cordillera, continuing to include indigenous communities in determining future conservation plans, routing gas pipelines outside of the Cordillera, prohibiting road construction and controlling human immigration to the area.

The Smithsonian Institution study of the Lower Urubamba Region concludes "While many Neotropical forests experience negative impacts from agriculture, logging, hunting and development for petroleum products, to date the Lower Urubamba Region remains an intact wilderness with abundant biodiversity and an excellent chance for survival if economic development proceeds in an appropriate informed manner."

Given the ecologically sensitive nature and excellent state of conservation of these two areas it will be impossible for the Camisea Gas Project as currently planned to prevent or mitigate all negative environmental impacts. The following section will analyze the potential negative impacts of the Project to biodiversity in these two areas.

2. Best Practices and International Standards:

Environmental organizations have succeeded in convincing some prominent financing agencies to establish standards that prohibit projects that degrade or convert natural habitats of high biodiversity, particularly those that provide critical ecological services, are globally unique and threatened. Financing agencies that have environmental standards often discourage development in primary tropical moist forests. Experience has shown that promoting development activities that open access to large expanses of tropical forests such as the Amazon Rainforest leads to colonization and deforestation at alarming rates . Climate change modeling shows that deforestation of the large mass that is currently the Amazon Rainforest would lead to a decrease in rainfall and increase in fires which would contribute significantly to global climate change. It is also well documented that biodiversity rich moist tropical forests provide non-timber forest products that have unique medicinal qualities that could provide cures for many illnesses and diseases. These forests are home to an intricate web of life and the maintenance of this biodiversity requires conservation of the habitat and all organisms living within - including indigenous peoples who have lived within these forests for thousands of years.

The World Bank (WB) has established international precedence by their implementation of environmental standards related to forestry, environmental assessment and natural habitats. Many development projects sponsored by multi-national corporations refer to World Bank policies for "best practices" guidance.

The EIA prepared by Walsh Peru for the Camisea gas pipeline states that the project's design and construction complies with World Bank standards (Vol. I R, pg. 2). The fact that primary moist tropical forests will be destroyed to construct the pipeline violates the World Bank's forestry policy. The forestry policy is being revised however one of its most important features is the prohibition of financing projects that damage primary moist tropical forests.

The Project will traverse 11 habitats (a total of 167 kms.) that would likely be classified by the World Bank as critical natural habitats (Vol. I R, pg. 63). The World Bank's natural habitat policy (OP 4.04) prohibits WB involvement in projects that involve significant conversion or degradation of critical natural habitats. Critical natural habitats would include: existing protected areas and adjoining or linked areas or resources on which the protected areas depend; sites identified as meriting protection; and sites critical for rare, vulnerable, migratory, or endangered species. Significant conversion is defined as elimination or severe diminution of the integrity of a critical or other natural habitat caused by a major, long-term change in land or water use. Conversion can result directly from the action of the project or through an indirect mechanism (i.e., through induced settlement along a road). The definition of degradation is modification of a critical or other natural habitat that substantially reduces the habitat's ability to maintain viable populations of native species. The biological baseline studies do not provide the information required to evaluate degradation according to WB standards. The environmental management plan does not include measures that guarantee access will be controlled over the long-term effectively discouraging settlement along the right of way or access roads. The Project planners and sponsors should strive to achieve best practices using standards such as the WB's for guidance however, as mentioned above, compliance with the forestry and natural habitat policies is questionable.

The part of the Camisea Project that involves gas exploration, extraction and processing in Block 88 of Camisea would most likely not comply with World Bank environmental standards either. Perhaps that is why the sponsors of this part of the project - Pluspetrol, and the company that conducted the EIA - ERM, did not venture to state that the Project will comply with the standards. ERM's baseline study does state that 90% of Block 88 is primary forest - mostly moist tropical forests. It is very likely that the entire Block would be considered a critical natural habitat by the World Bank due to the very high levels of biodiversity and endemism, pristine state of conservation and proximity to Manu National Park, Santuario Machiguenga Megantoni, Reserva del Estado al Favor de las Poblaciones Nativas Nomade Kugapakori y Nahua and the Zona Reservada de Apurimac. It is very likely that degradation and significant conversion of this area will occur. Primary forest will be destroyed and wildlife including endangered species will be affected. The pristine habitat and delicate balance of forest and aquatic ecosystems will be degraded unless zero contamination is achieved. The migration of people to the area and the construction of a pipeline opening access to Las Malvinas will very possibly lead to conversion of the forest over the long-term.

It is worrisome that both components of the Project as currently planned will not comply with World Bank environmental standards. Peruvian law provides the legal framework for implementation but lacks guidance for achieving internationally acceptable best practices. Some level of guidance for achieving globally acceptable best practices should be defined for implementing this Project. The environmental management plan (EMP) for Block 88 states that it will try to maintain U. S. Environmental Protection Agency standards (EPA SW 846) for soil, groundwater and surface water and air quality including emissions (Executive Summary, pg. 61). It is very important that these standards are monitored and maintained however, international standards have not been identified to guide biodiversity and social impacts. This is particularly necessary for the Camisea Gas Project because it is being implemented in regions of outstanding global biodiversity that are inhabited by indigenous peoples whose livelihood is linked to the health of the natural habitats within which they live. A discussion of potential negative impacts on biodiversity in these ecologically sensitive areas and their implications follow.

The Shell Oil Company when they operated in the area, was committed to actively work at controlling access and stemming migration into the area. They also invested significant time and resources to establish a productive working relationship with the local communities and key stakeholders that enabled them to actively seek and identify common solutions to potential mitigation problems.

3. Observations: Environmental Impact Assessments and Environmental Management Plans:

Irreversible Loss of Critical Natural Habitats and Biodiversity
Despite the rigorous impact analysis conducted by ERM for Block 88 and definition of mitigation measures pristine habitat and biodiversity will be lost. It is doubtful that even the most sophisticated technologies could prevent this. The top ridges and eastern slopes of the Cordillera and Vilcabamba and the Lower Urubamba Region are still in an excellent state of conservation with very little human induced disturbance. The local people are primarily indigenous and have lived in harmony with these natural habitats for thousands of years. Their relationship with their local natural environment is part of the delicate ecological balance that maintains the ecological health of these areas. Biological assessments conducted by the Smithsonian Institution and ERM show that wildlife endangered or threatened in most other parts of the world are found in viable populations in the Lower Urubamba Region (Executive Summary, pg. 19). The establishment of any large infrastructure project in these areas will alter the state of conservation of these critical natural habitats. Primary forest will be destroyed to make way for the infrastructure, access will be improved for construction and operation and people from outside of the area will migrate to the area to work for the Project.

The activities in Block 88 will involve the clearing of 72 hectares in Las Malvinas for the gas condensation plant and related infrastructure and 4 to 12 hectares for the drilling platforms - some of which have already been cleared by the previous drilling operations. In addition, 64 kilometers of 25 meter right of ways will be opened to lay the flow lines between the drilling fields and the plant. The seismic prospecting will involve clearing 1.5 meter wide trails every 300 to 400 meters east-west and north-south throughout 800 square kilometers. The environmental management plan (EMP) specifies that trees larger than 20 cm. at breast height would not be felled to allow animals that travel by canopy to cross the openings (EMP, construction phase of flow-lines). However, smaller animals traveling along the forest floor will be hindered by the 25 meter rights of way. Also, it is planned that transport of goods, equipment and people will be done by helicopter and river transport - "off shore in land". However, they state it may be necessary to build some temporary access roads but do not specify where these will be constructed. There are also plans to restore the cleared areas with native vegetation when they are no longer needed which could vary from one year in the case of the seismic lines, several years for the flow lines to 33 years for the plant and drilling sites. All of these activities, generating direct impacts on this critical natural habitat, will compromise it's current ecological state - large animals will migrate, small animals may die, primary forest will be lost and in some areas aquatic systems may be altered with the increased siltation caused by erosion and riverbed alteration for construction. The ecosystems will eventually find their equilibrium but it will not be possible to restore them to their original state. If an accident occurs, it will cause significant degradation to the affected natural habitats incurring even greater biodiversity loss.

The construction and operation of the gas pipeline from Las Malvinas through the Cordillera of Vilcabamba over the Andes mountain range down to the coast will also cause some irreversible damage to critical natural habitats. The gas pipeline will traverse a total of 167 kilometers of critical natural habitats. Prevention of degradation of all of these habitats is important however, this review focuses on the Urubamba River Valley and will analyze the potential impacts on the 84 kilometers of critical natural habitat that will be traversed by the pipeline in the Urubamba Valley. The 84 kilometers include the first part of the pipeline where it originates in the Lower Urubamba Region crosses the Cordillera of Vilcabamba to the Apurimac River. Direct impacts to these critical natural habitats include the clearing of the 25 meter wide right of way, construction of three camps that will occupy an area of 40,000 to 60,000 square meters each, clearing of several heliports, the construction of two pumping stations, the improvement of some existing roads and construction of temporary access roads. As these critical habitats are also in an excellent state of conservation and are comprised largely of primary tropical forests the direct impacts will be similar to the ones that will occur in Block 88. The main difference is that the nature of the project and EMP are distinct. Maintaining a natural canopy over the right of way is not part of the plan and restoration measures for most of the areas cleared will not occur until abandonment. Given the pristine nature of much of the forested areas that will be cleared they will never return to their original state. Some reforestation is planned. Communities are being told by TGP that they will be able to replant vegetation on the ROW once the pipeline has been buried but they will not be able to plant species with deep roots. In effect, this means that most native tree species will not be planted. The right of way and the pumping station areas will not begin to return to a natural state until abandonment currently defined between 33 to 40 years, at which time it is very likely some of the areas soils will be impacted and some irreversible damage to the surrounding areas will have occurred as well. The planned crossings of nine rivers will alter the aquatic ecology of an intricate network of river systems temporarily and some areas may never return to their original state.

The EMPs for both components of the Project propose to mitigate and reverse direct negative impacts on the environment. Direct impacts refer to impacts caused as a result of construction and operation in the vicinity of the project infrastructure. The measures include in very general terms reforestation to restore cleared forested areas (the right of way for pipelines and flow lines will be reforested with shallow rooted plants during the operation phase), aerial or horizontally guided construction across the bigger rivers to minimize disturbance and traditional construction on all other rivers that will cause temporary disturbance, the closing up off all new access roads, the application of erosion control measures where vegetation has been disturbed and the implementation of strict waste and pollution control mechanisms (Environmental Management Plan Charts). All of these measures are very necessary to reduce negative impacts however, they will not prevent the loss of some critical natural habitat and biodiversity in the Lower Urubamba and the Cordillera de Vilcabamba.

Perhaps of even greater concern is the potential loss of critical natural habitat and biodiversity beyond what will be affected by the direct impacts of construction and operation. There is a significant risk that the cumulative affects of the migration of workers to these areas and the opening up of these areas for the construction and operation of the Project will cause significant loss of these critical natural habitats and biodiversity over the long-term.

Deficient Analysis and Mitigation Plans for Long-term Induced Impacts that Could Lead to Significant Conversion of Critical Natural Habitats and Loss of Biodiversity
The Lower Urubamba and the upper ridges and eastern slopes of the Cordillera de Vilcabamba have remained in an excellent state of conservation and still harbor extraordinary biodiversity primarily because natural barriers have kept people from migrating to these areas. The Pongo de Manique, the ridges of the mountains to the east and the west, the thick tropical forests, steep valleys and lack of roads have obstructed human migration to these areas. The influx of workers to these areas to construct and operate the Project, the opening up of the forest for the gas pipeline right of way, the improvement of the few roads that are currently passable only a few months out of the year and the building of access roads - even if they are temporary, to facilitate movement in the area is an issue of enormous concern to the local people and environmentalists.

For evidence of the magnitude of the potential threat of migration and colonization to the area and the devastating consequence it could have on tropical forests and watersheds, one can look beyond the current natural barriers to the western slopes of the Cordillera de Vilcabamba and the Upper Urubamba Region. Conservation International has documented that 25% of the Tropical Andes has lost its original forest cover. Much of the forests of the Tropical Andes to the north and west of the Cordillera of Vilcabamba have been fragmented and degraded due to agriculture settlement. The same situation is encountered to the south in the Upper Urubamba Region where 350,000 hectares of forest have been degraded due to agricultural activity . Any improvements in access to Lower Urubamba and the eastern slope of the Cordillera de Vilcabamba would invite migration of people from outside of these areas and initiate the process of colonization. Migrants would initially settle near the areas of improved access cutting and burning the forest to cultivate and would eventually spread further in as pressure increases on the natural resource base.

The plans for constructing the gas pipeline include use of the already existing road between Cusco and Quiteni (Kiteni). The construction company will then use the roads Quiteni to Kepashiato and Quiteni to Chimpiarina to arrive at the construction camps. The companies plan to improve the roads between Calca - Quiteni, Quiteni - Chimpiarina and Quiteni - Kepashiato, which has already been improved. The EIA states that in between these points access for construction will occur exclusively along the right of way (Vol I, Part 3, pg. 23). The Coordinator's recent visit to the area confirmed that the construction of access roads in the area is in the process of definition and it is still unclear whether the final plans will correspond with the EIA plans. These kinds of road improvements will make it much easier for colonists to move into and around an area that has been, up until this point, very difficult to get to and travel within. CEDIA has already recorded increased colonization in the area due to access improvements made by the EIA topography and survey personnel .

Where as, the direct impacts receive a thorough analysis in the EIAs - particularly the ERM EIA, there is very little analysis of long-term induced impacts. Both EIAs mention access as a potential negative impact and it is assumed in both reports that it will be controlled. However, the EMPs do not propose strict measures to control access along all points of improved access for the duration of the both the construction and operation phases of the Project including: right of ways, paths, seismic lines, improved river transport, access roads and improved roads. The EMPs make no commitment to prevent colonization and settlement in the area.

The contradictory land use situation in these areas make the access issue potentially more problematic. According to Peruvian law indigenous communities are granted rights to land and the Machiguenga peoples have been granted legal rights to their lands. Communal ownership is applicable only to land apt for agriculture and cattle raising. Legally indigenous people can also access forested reserves for subsistence not commercial purposes. Other pressures on these forests would threaten their well-being. Induced colonization and increases in illegal hunting and logging, in addition to having a negative impact on biodiversity, could also lead to conflicts between the indigenous people and new colonists.

ILO Convention 169 recognizes the right of indigenous peoples to occupy sufficient traditional lands to maintain their customs and sustain their livelihood well into the future. However in Peru, the State reserves the right to explore, extract and transport minerals and hydrocarbons on these communal lands. The nature of these activities which are over the long-term, beyond the control of the local inhabitants and produce irreversible negative impacts amounts to an expropriation of the communal land where these activities take place. ILO Convention 169 also mentions that governments should respect the special nature of the indigenous lands including the lands value to maintain livelihood, culture, spiritual values, communal use and ability to sustain the generations to come.

The land use situation is complicated by the fact that all areas, including protected areas, are subject to the free passage of oil and gas pipelines, and other installations for the exploration and exploitation of minerals and petroleum. Block 88 is in fact surrounded by several protected areas: Manu National Park, two reserves - Reserva Comunal de Vilcabamba and Reserva del Estado al Favor de las Poblaciones Nativas Nomade Kugapakori y Nahua and a sanctuary - Santuario Machiguenga Megatoni. The gas pipeline will bisect 65 kilometers of the Reserva Comunal de Vilcabamba, part of the Zona Reservada de Apurimac. Due to the fact that law gives the Project sponsors the right to establish and operate the Camisea Gas Project in and near these "protected areas" there are no legal grounds for preventing improved access to them as a result of Project activity. The consolidation of these large protected areas is already a very big challenge for conservationists and the native inhabitants who live within these areas. The intrusion of large-scale construction and industrial activity, the influx of workers and improvement of access to theses areas will make that challenge much greater. There is a contradiction in the fact that the protected areas have been established to preserve critical natural habitats and the indigenous cultures and livelihoods of the people who live within them yet they will not be protected from a significant development project such as the Camisea Gas Project which threatens to degrade its current state of conservation - directly and indirectly.

Stronger Measures Needed to Prevent Contamination
To protect the biodiversity of these critical natural habitats the companies would need to maintain zero contamination levels. Contamination to soil, air and water must be prevented. Alteration of any of these elements will have negative affects on the fragile forest and aquatic ecosystems found in the Cordillera de Vilcabamba and the Lower Urubamba Region. The well-being of all living organisms within these ecosystems, including indigenous inhabitants, are linked to these three elements. Also in these areas noise contamination is a relevant issue as noise can alter wildlife behavior and the quality of life of the local people.

The wastes generated be the thousands of employees living in the camps, numerous equipment and machinery that will need to be maintained and operated, the construction and operation of a gas separation and condensation plant, and drilling operations in four distinct areas will need to be controlled and contained. The wastes would need to be shipped out of the area or treated on site until it can be reintroduced into the natural environment without compromising the health of the pristine ecosystems.

The EIAs have identified potential negative impacts related to contamination and have addressed them in the EMPs. The ERM EIA identifies EPA standards for maintaining air, water and soil quality. It will be necessary to ensure that internal and independent monitoring is effective and compliance is enforced. The Walsh EIA is not as strict in application of standards and this is a cause for concern particularly given the sensitivity of the affected areas. The quality of water and air for the TGP part of the Project will only be monitored during the construction phase and international standards have not been specified.

Given the ecologically and socially sensitive nature of these areas it is important that camps, transport and industrial facilities maintain zero discharge of waste, water should be treated by water treatment plants to achieve rainwater quality, incineration of solid wastes should limit the discharge to carbon dioxide and water, all other waste products should be shipped off site and the gas processing plant and related facilities should be operated under total material balance conditions. Pluspetrol plans to install and operate incineration and water treatment plants that have the technical specifications effectively treat burnable and liquid non-toxic wastes. TGP does not plan to install plants with comparable specifications, which means that waste generated during the phase of pipeline construction and operation will very likely contaminate the pristine environment.

Explosions are not uncommon in these types of facilities. Explosions or accidental spills would be devastating to the local ecosystems. All possible precautions must be taken to prevent accidents and the strictest contingency measures must be adapted. The EMPs both include contingency plans for emergency however, they will only be effective if staff are well prepared and trained and early warning systems are in place and effectively functioning.

Stronger Measures Needed to Control Erosion
Both EIAs have identified the need to control erosion caused by construction and operation and have defined various measures for controlling erosion. Due to the magnitude of the construction activities that will occur and the natural characteristics of the habitats that will be affected erosion is a significant concern.

The Urubamba Valley has a terrain that is characterized by mountains, gently rolling hills, steep river valleys as well as wide meandering rivers and flood plains. The area is marked by an intricate system of rivers as highland waters drain into the Amazon River Basin. The rainfall is very high ranging from 3,000 to 5,000 mm. annually and generally, the tropical top soils are shallow and fragile. Once the natural vegetation is removed significant erosion begins to occur as soon as the first rain falls. Unless control measures are in place at this time - irreversible damage will occur.

Loss of topsoil, siltation pollution of the aquatic river systems and landslides on inclines are some of the major potential problems. Topsoil is washed off into the widely spread system of rivers and siltation occurs altering the quality of the river water negatively affecting aquatic ecosystems. If the soil contains waste that has been spilled during construction or operation the pollution problems to the aquatic ecosystems will be compounded. Once the topsoil has been lost it is very difficult to re-establish a fertile layer for reforestation efforts. Reforestation efforts that will be critical to the success of mitigating negative impacts to the pristine forest ecosystems cannot be compromised by weak erosion control measures. The right of way, access roads, flow lines and seismic lines will be constructed over fragile river banks and hilly - in some cases mountainous, terrain. Vegetation will be removed for construction and erosion will occur unless controlled prior to rainfall. In these steep areas landslides can occur which will alter the topography and contribute to significant runoff causing significant damage to the local aquatic ecosystems.

Evidence of a significant level of erosion can already be seen along the roads that the companies have improved leading into the Lower Urubamba. Despite plans and promises to construct carefully to minimize erosion and apply strict erosion control measures after construction, this has not been done. If this is an indication of the quality of application of mitigation measures that can be expected throughout construction and operation of the Project this is indeed, cause for great concern.

Compliance
As mentioned above, both the Walsh and ERM EIAs have defined elaborate EMPs touching on many of the negative impacts that this review identifies. As this report points out in the section on conclusions and recommendations, additional measures will need to be implemented in order to better prevent and mitigate some of the negative impacts to critical natural habitats and the indigenous people who live within these habitats. In addition to these measures it is absolutely vital that the Project sponsors, the Peruvian government and Project Financiers, ensure effective and complete implementation of what they are proposing in the EMPs. The following section presents the major conclusions of this study and desired outcomes for prevention and mitigation of negative environmental and social impacts.

V. CONCLUSIONS AND DESIRED OUTCOMES
A. CONCLUSIONS

Irreversible Negative Impacts and Compliance:

The Project will have negative irreversible impacts on the biodiversity of this area and on indigenous groups living in isolation regardless of the implementation of the strictest mitigation measures. In addition, there is concern that even if the consortia were to plan the strictest measures that in reality the companies will not adhere to and comply with plans and targets. There are no financial incentives or strict enforcement in place to ensure compliance with plans over the life of the Project. The Peruvian government's capacity to enforce compliance is weak. None of the companies involved in the consortia have a history of applying best social and environmental practices.

The lead operators for both Project components have had environmental and in some cases, social problems with other projects in the Region. Early this year, TGP's lead operator - Techint - lead operator on the Argentinean Norandino gas pipeline, experienced a large explosion - the second one in less than a year- which sent flames leaping through the Yungas forest, an area of critical conservation status. In Ecuador, Techint is in charge of construction of the OCP pipeline and has been involved in much controversy: facing lawsuits, protests, and fines for degradation of protected areas and rare endangered species habitat. In 2000, a Pluspetrol oil spill contaminated the Maranon River which borders one of Peru's largest protected areas, the Pacaya-Samiria Reserve, and seriously affected the health of the Cocamas-Cocamillas people. Elsewhere in Peru in oil block 1-AB and 8-8X, Pluspetrol has caused pollution through the continuing use of out-of-date technology and methods inherited from Occidental Petroleum and Petroperu when they both owned these blocks. The company admitted that during their extraction operations in the month of March 2002 they calculated that 43,500 barrels (5% crude and 95% water - by products of production) were drained into surrounding streams and rivers. Achuar and Quichua indigenous communities living near these well sites are suffering from stomach ailments, cancer and respiratory diseases caused by direct discharges of oil wastes during the 33 years of operation of the companies in this area.

Specific conclusions related to compliance are as follows:

· Compliance with international standards: Neither component of the Project meets World Bank standards. Exploration, extraction and transport activities will destroy primary tropical humid forests and will lead to degradation and conversion of critical natural habitats. Special analysis of impacts on indigenous groups - particularly indigenous groups living in voluntary isolation is deficient. Corresponding plans to prevent and mitigate negative impacts to these groups is lacking. Both companies are in violation of the ILO International Convention 169. Local stakeholders were not given appropriate information or sufficient time to study and respond to the environmental impact assessments. Current compensation negotiations and practices do not allow for free and informed decision-making on behalf of the indigenous groups. They have not been involved in decision-making over issues that will affect them.

· Irreversible negative impacts: Project sponsors should be aware that regardless of the strictest mitigation plans there will be irreversible negative impacts on biodiversity and isolated indigenous groups.

· Capacity and will: At this point, it is doubtful that the companies have the will or capacity and in the case of the Peruvian government - the capacity, to ensure strict compliance to environmental and social mitigation plans.

· Targets and measures: In the case of TGP, mitigation targets and measures are deficient.

· Independent monitoring: Plans do not include truly independent and transparent monitoring processes.

· Independent oversight: The Project lacks independent technical and advisory oversight.

Recognition of Induced Impacts and Control of Access:

Both EIAs include extensive sections on analyzing potential direct impacts. However, analysis of indirect induced impacts and corresponding environmental management measures to mitigate them are deficient. The EIA for the upstream component does analyze indirect induced impacts, however the environmental management plan is weak when it comes to measures for preventing or mitigating induced impacts. The EIA for the downstream component does not recognize indirect induced impacts therefore, the environmental management plan does not address them. Both components were studied separately so there is no recognition of the combined impacts of both components. For example, Pluspetrol plans to prohibit the construction of roads to hinder access however, no mention is made of the fact that the other component - the gas pipeline, will open up access to the Cordillera of Vilcabamba, Lower Urubamba and Block 88. For such a complex Project that will be implemented in an extremely sensitive area this is a significant shortcoming. The local communities, human rights and conservation groups are very concerned about indirect impact issues such as improved access which will lead to increasing colonization, deforestation, environmental degradation, health hazards, loss of cultural integrity and social conflict. The companies must be required to implement measures to control access.


Specific conclusions related to controlling access are as follows:

· Roads: Both the downstream and upstream components are planning to build access roads for construction. The upstream EIA acknowledges that they may have to build access roads within clusters but does not specify where and how they will be built. The downstream EIA states that in the rainforest section they will only build or improve three roads and utilize the right of way to construct the pipeline. Plans to improve roads and build access roads must be heavily scrutinized and discouraged. Any road in this sensitive area will lead to conversion and degradation of primary tropical forest habitat.

· Access to native lands: Relatively new migrant settlements favor the construction of these roads permanently while most indigenous communities oppose them. The plans for access road construction and improvement of existing roads should respect the environmental and social sensitivities in the area. Care should be taken not to satisfy one stakeholder group at the expense of another group, particularly the native groups.

· Seismic trails and ROWs: Plans to reduce and mitigate the negative impact of opening up seismic trails and rights of way for flow lines and the pipeline in the moist tropical rainforest areas are not adequate. Measures to effectively stem access immediately after opening up the forest are not evident in the EMPs. Uncontrolled access along the trails or rights of way, even for a period of a few months, will very likely lead to irreversible negative impacts on the forest habitat. TGP mentions in their EIA that they will consider reducing the right of way from 25 meters to 15 meters in the rainforest section of the ROW. Recent negotiations for ROW access with local communities are based on the 25-meter width confirming that TGP has ruled out this possibility.

· Lands with special legal status: Native territorial lands, reserves, protected areas and sanctuaries will become more accessible to outside intruders as a result of the Project. The pipeline ROW will cross through the Reserva Comunal de Vilcabamba facilitating access. The pipeline ROW will lead to Las Malvinas where the flow line rights of way crossed by seismic trails will open up access to the Reserva del Estado al Favor de las Poblaciones Nativas Nomade Kugapakori y Nahua. Improved access to both of these areas will violate their protection status leaving the extraordinary biodiversity of the Vilcabamaba Range and the indigenous groups living in isolation vulnerable to significant irreversible negative impacts. There are no Project plans to respect the special legal status of these areas. In the case of these special areas, prevention by excluding Project activities from these areas is the only effective way to achieve mitigation of these irreversible negative impacts. CEDIA has made a proposal to TGP to vary the route of the pipeline slightly to by-pass the Reserva Comunal de Vilcabamba. The company has not accepted the proposal.

Community Relations:

Local stakeholder relations with the companies are troublesome. Although some of the initial consultations went well - especially those conducted by ERM, the public involvement in the EIA reviews have been woefully inadequate. The local stakeholders have not had any input into the Project design, environmental management plans or proposed compensation measures. Compensation negotiation practices have served to divide, confuse and weaken the local communities.

Specific conclusions related to community relations are as follows:

· Insufficient consultation and participation: Explanations of EIAs to the public and the public comment periods were deficient. Local stakeholders have not been consulted adequately regarding design and the implementation aspects of the Project that will impact directly on them.

· Negotiations on each company's terms: The companies are negotiating exclusively on their terms and communities are faced with having to negotiate with one to three different companies over related issues. There has not been any effort to integrate approaches between companies.

· Divided efforts and resources: Different "deals" are being presented to each community. No effort has been made to work with the communities collectively. The companies have not taken the initiative to combine efforts and resources to work with the communities to effectively address their concerns regionally and in an integrated fashion.

· Not addressing the issues: What appears to the communities' as a chaotic and divisive process is also not addressing their concerns. Instead, it is generating mistrust between the companies and the local people. The local communities are very aware of the potential social and environmental problems and they realize that the divided and partial compensation deals will not address these issues.

Indigenous Peoples Living in Isolation:

The magnitude of the Camisea Gas Project demands a thorough and accurate assessment of the needs and wishes of peoples living in voluntary isolation and a rigorous and full analysis of project impacts on their lives. Methods proposed to mitigate social impacts on isolated peoples are deeply deficient, though it should be noted that improved mitigation methods would only partially reduce the substantial risks of serious social impact on isolated indigenous peoples presented by the project. The Nanti, Nahua and Kirineri peoples will be affected to varying degrees and in different ways.

Specific conclusions related to indigenous peoples living in isolation are as follows:

· Human rights: The Camisea Gas Project repeatedly violates the indigenous people living in isolations' internationally recognized rights as human beings and indigenous peoples.

· Unwanted contact: Even though the companies may discourage contact it is extremely likely that during the 33 year period of implementation of the Project that contact will occur against the will of some of these groups.

· Respecting the Reserve: The boundaries of the Reserva del Estado al Favor de las Poblaciones Nativas Nomade Kugapakori y Nahua have not been respected in Block 88. Three of the four platforms and most of the seismic activity will take place in the Reserve. Respecting the boundaries of the Reserve and the rights of the isolated peoples would entail prohibiting development of three of the platforms (Cashirairi 1 & 3, San Martin 3)and reducing seismic exploration so that it will not take place in the Reserve.

· Independent oversight: No independent oversight mechanism has been proposed to ensure adequate development of measures and strict compliance to company policies, codes of conduct and contingency plans related to indigenous peoples living in isolation.

Safety of Local Communities:

Local communities have never been exposed to an industrial project. Extreme care should be taken to safeguard their health and safety. During the workshops that were held in the area the local communities expressed a high level of understanding and concern over potential health and security risks. It is likely that the EIA consultation process contributed to this awareness. On the other hand, despite the thoroughness of the consultation analysis, the Project design and plans have not taken several major local concerns into account.

Specific conclusions related to safety are as follows:

· Physical threats: The current design has the gas pipeline running precariously close to human populations and civil structures.

· Social threats: Workers camps will present a significant intrusion on the local native population. They pose serious potential threats to the local peoples health and culture. Any relationship between the workers and the local communities could lead to negative social impacts.

· Livelihood: The Machiguenga communities are concerned that their main source of livelihood - the rivers - will be interrupted during gas pipeline construction. During the dry season many of the indigenous communities relocate temporarily to the riverbanks and beaches. The TGP EIA states that five of the seven rivers between Las Malvinas and the Apurimac River will be affected by gas pipeline construction temporarily. The pipeline will be constructed by traditional means. The rivers will be blocked temporarily by damming the rivers so that the pipeline can be buried beneath the riverbed. The Machiguenga people ask that their rivers not be blocked, even temporarily, as it will cause serious hardship to their communities - particularly during the dry season. The companies should consider laying the pipeline in these five rivers using the same horizontal drilling techniques as they will use on the Urubamba and Apurimac Rivers.
B. DESIRED OUTCOMES

Contamination:

All camps, construction sites, drilling platforms, the Las Malvinas gas processing plant, turbo-expansion units, condensate stabilization plant, gas compression stations, the liquid pump stations and other related facilities should be operated under total material balance conditions and should maintain zero discharge of waste. Wastes that are discharged within the local environment should in the case of liquids - be the quality of rainwater, and in the case of emissions - include only water and carbon dioxide.

All possible precautions must be taken to prevent accidents and the strictest contingency measures must be adapted. Adequate valves and intelligent pigs should be installed to prevent and minimize damage in this sensitive area.

Construction of pumping stations between Las Malvinas and the Apurimac River should be avoided. Technically modifying pipe dimensions can do this.

Erosion:

Erosion control should be a priority throughout the life of the Project. The goal should be to prevent and control erosion throughout the entire area, especially on slopes and within watersheds.

The companies are responsible for implementing all restoration and soil erosion control measures - not the communities. However, communities should be involved in independent monitoring efforts to ensure that the companies effectively control erosion.

Indigenous groups living in isolation:

The Reserva del Estado al Favor de las Poblaciones Nativas Nomade Kugapakori y Nahua must be respected. No Project activities or Project related personnel should infringe on the Reserve.

The Kugakapori and Nahua peoples desire to remain un-contacted or isolated must be respected and strict measures put in place to enforce this.


Control of Access:

Project activities, gas pipeline and flow line right of ways (ROWs), seismic lines, access roads and the increase in river and air transport should not encourage improved access to the Lower Urubamba or Cordillera de Vilcabamba areas throughout the life of the Project. Strict measures must be taken to mitigate access in the short and long-term.

The companies should be responsible for prohibiting the influx of people from outside of the area to settle - not the communities.

Social Development and Conservation:

The socio-economic indicators of well-being of the indigenous communities affected directly and indirectly by the Project should improve.

The Project sponsors should be held responsible for any decline in socio-economic well-being of the local population and should support preventative measures to ensure that the local people do not become worse off over the long-term.

The Project sponsors are responsible for ensuring that the state of conservation of the Lower Urubamba and Cordillera de Vilcabamba regions remain as it is today - in an excellent state of conservation.

Primary forest cover will diminish during the construction phase of the Project however, the Project sponsors must ensure that further deforestation of natural forest cover does not occur in these areas.

Boundaries and the special status of reserves and protected areas must be respected.

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