Mr. Enrique Iglesias
President
Inter-American Development Bank
1300 New York Avenue, NW
Washington, D.C. 20577
Dear President Iglesias,
We are writing to again express our concern that the Camisea Gas and Gas Liquids Project is expanding into Block 56 (adjacent to the project’s initial exploration zone Block 88) without the environmental and social safeguards required by the Inter-American Development Bank for all future hydrocarbon concessions with output from the Camisea pipeline. Block 56 is a 58,500 ha area in the Lower Urubamba region containing the Pagoreni and Mipaya fields with an estimated 3 trillion cubic feet of natural gas and 220 million barrels of gas liquids. It is an area of primary rainforest that is the homeland for numerous Machiguenga Indian communities and Kirineri indigenous people living in voluntary isolation (see attached map of the Nahua-Kugapakori reserve with a portion of Block 56). The unregulated development of Block 56 will likely place the Kirineri at risk of suffering catastrophic health conditions similar to those experienced by the voluntarily isolated Nanti people in the first phase of the Camisea Project1. Such projects are bound to expose these vulnerable peoples to infectious diseases that they have neither the immunological resistance nor cultural resources to combat. Forcing the Kirineri to adapt their lifestyle to accommodate hydrocarbon exploration in their territory will inevitably erode if not destroy their chosen traditional way of life. This letter will present the background of this issue and our concerns about it in more detail. In brief, we urge the Bank to postpone first disbursement on the Camisea loan until the Peruvian government and consortium members have fully complied with all conditions relevant to this and other outstanding environmental and social concerns.
The process of developing block 56 is rapidly moving forward. On September 7 of this year, Perupetro signed a license contract for Block 56 with the same major companies involved in the initial Camisea project including Pluspetrol, Hunt Oil, SK Corporation, Tecpetrol and Sonatrach. These sponsors expect to invest $550 million in the project now dubbed Camisea 2 to exploit natural gas and natural gas liquids from the Pagoreni field and pump them into the Malvinas plant constructed for Camisea 1. They then expect to spend an additional $1.1 billion to increase the capacity of the IDB-funded Camisea pipelines to carry natural gas and the natural gas liquids to the coast. Their ultimate goal is to construct a new facility for gas liquefaction to deliver liquefied natural gas (LNG) to markets in Mexico and the United States. Perupetro has authorized the ERM firm to conduct an Environmental Impact Study that they expect to be completed by November 2004 and approved by May 2005. Hunt Oil expects to begin three and a half years of construction work on this project in June 2005.
This expedited expansion of the Camisea project should be a concern of the IDB since Section VIII of the loan conditions state the Peruvian government should:
“Implement the necessary policy and legal changes that will require all future hydrocarbon concessions with output flowing through the Camisea pipeline to conform to internationally-recognized environmental and social safeguards and standards, such as those of the International Finance Corporation (IFC), regardless of whether they receive official public finance;”
The IFC, for example, utilizes the 1998 World Bank pollution prevention and abatement handbook and its own Environmental, health and safety guidelines to set standards for 69 specific industries including oil and gas development. It has also adopted an additional ten safeguard policies including policies on environmental assessment, natural habitats, indigenous peoples, cultural property and involuntary resettlement.
The Peruvian government has not come close to employing these standards for Block 56. In its letter detailing its rationale for compliance with this condition prior to IDB financial closure on the loan, the Peruvian government stated that it was adopting internationally recognized safeguards in its hydrocarbons laws and had made changes to Clause 13 (Environmental Protection) of the exploration and exploitation contract for Block 56 to mandate observance of these higher levels of environmental and social safeguards. Their letter also stated that separate agreements instituting these standards were also made with the companies already granted licenses for adjoining blocks 57 and 90. So far, we have been unable to obtain the wording of these changes to Clause 13 from the IDB’s Private Sector Environmental and Social Unit. After receiving no response to a written request on Sept. 16 to Perupetro for these changes, we spoke directly with the Manager of Contracts for Perupetro, Mr. José Chávez Caceres. He provided at best ambiguous responses for a description of the changes that had been made to Clause 13 of the contract for Block 56. He did indicate that the language in the contract concerning consultation was not changed, but that consultations would be conducted differently from the first Camise project. The norms for dealing with environmental concerns were altered, but there is no clear evidence that these now match IFC or any other set of internationally recognized environmental standards. While the contract for Block 88 has been posted on the Camisea website, he declined to provide a copy of the Block 56 contract.
Despite Perupetro’s intent to improve its method of consulting indigenous communities on the expansion of Camisea into Block 56, it has failed to demonstrate any improvement. Beginning in December 2003, Perupetro held meetings with representatives of indigenous communities in the Lower Urubamba valley of Peru to inform them about the government’s plan to conduct an environmental impact assessment (EIA) of hydrocarbon exploitation in Block 56. After obtaining signatures from individual communities Perupetro authorized the consulting firm ERM to begin the EIA. An Amazon Watch researcher who visited the village of Kirigeti found that the subchief of the village, Marcelino Turco, had been the sole signatory of one such agreement in February 2004, contrary to the wishes of many members of this community –indicating that the signatures obtained may not have been indicative of community support or permission. Noticeably absent from these agreements was COMARU, the indigenous organization that represents 29 communities in the region and is best able to represent the rights of the Kirineri people living in voluntary isolation, who are ill-prepared to participate in any consultation process of this sort.
This process of lobbying individual members of communities to consent to activities with far reaching consequences sharply contrasts with Peru’s obligations to observe the prior informed consent requirements described in the International Labor Organization Convention 169 on Indigenous Rights, a convention ratified by the Peruvian government and that the IDB has specifically called on the Peruvian government to observe in its execution of the Camisea Project. Section 6.1(a) of this convention calls on signatory governments to: “Consult the peoples concerned, through appropriate procedures and in particular through their representative institutions, whenever consideration is being given to legislative or administrative measures which may affect them directly.” While the Peruvian government cites a ministerial decree (506-2002 EM/DM) as the justification for these consultations, the commencement of the EIA before communities fully understood and consented to its execution goes against the decree itself that states that local people will be consulted before, during and after the EIA. It is clear that this process has not been effectively implemented.
The other major question that arises concerning the expansion of hydrocarbon exploration activities is its collective impact on the entire region. Section VI of the IDB loan conditions states that the Peruvian government should:
“Actively participate and promote a system for ongoing strategic environmental planning for the Lower Urubamba area in order [to] ensure the environmental and social sustainability of the area, especially in relation to any future projects, and such planning to be multi-disciplinary, multi-stakeholders, in coordination with local and regional authorities.”
The Peruvian government’s response to this provision has been to assign the natural resources agency INRENA the task of preparing a plan to control illegal logging and hire consultants to consult with others to prepare a strategic environmental system. Eventually, the government claims, INRENA will consider these consultants’ recommendations and implement some system. This limited process will occur at much too slow a pace, and is too limited in scope, to influence the impacts set in motion by the fast-tracked development of new oil and gas exploration in the region. By the time this process has reached any meaningful level of coherence, if it ever does, the project will be well underway and the rapid development of Blocks 56, 57 and 90 will preemptively defeat any possibility that the region’s development can be planned sustainably and according to the input of experts as well as local communities and other stakeholders, as the IDB’s loan condition plainly intends.
In conclusion, the rapid development of Block 56 in the second phase of the Camisea project poses serious health risks to indigenous groups living in voluntary isolation and jeopardizes local communities’ rights to participate in the development of their territory. The Peruvian government and Camisea’s upstream consortium have not conducted proper consultation with indigenous communities, adopted internationally recognized environmental and social standards, nor developed an integrated regional plan.
We, therefore, urge you to carefully examine the way in which the Peruvian government and consortium members are managing the Camisea Project’s expansion into Block 56 and adjoining areas and take appropriate action to ensure that they are in compliance with the terms of the IDB Camisea loan. While the IDB loan has specific conditions related to expansion of the Camisea Project into adjoining areas, neither the Bank’s Private Sector Environmental and Social Unit nor its contracted monitors seem to be tracking these developments with any degree of rigor. In addition to asking the Bank to initiate these steps immediately, we strongly urge the Bank to postpone first disbursement on the Camisea loan until the Peruvian government and consortium members have fully complied with all conditions relevant to this and other outstanding environmental and social concerns.
Very sincerely,
Atossa Soltani, Amazon Watch
atossa@amazonwatch.org
Aaron Goldzimer, Environmental Defense
agoldzimer@environmentaldefense.org
Peter Kostishack, Amazon Alliance
peter@amazonalliance.org
Nadia Martinez, Institute for Policy Studies
nmartinez@seen.org
Cc:
Mr. Dennis Flannery, IDB, Executive Vice-President, flannery@iadb.org
Mr. Hiroshi Toyoda, IDB, Private Sector Department, hiroshito@iadb.org
Mr. Robert Montgomery, IDB, Private Sector Dept., Environment and Social Unit, robertm@iadb.org
Ms. Janine Ferretti, IDB, Sustainable Development Department, janinef@iadb.org
Mr. Jose Ignacio Estevez, IDB, Office of the Ombudsman, ignacioe@iadb.org
IDB Executive and Alternate Executive Directors
Attachments:
Map showing Block 56 and the location of populations of Kirineri peoples living in voluntary isolation.
