1) Five Pipeline Ruptures
There have been five pipeline ruptures and spills in the first 18 months of the pipeline’s operation, one of which caused an explosion. The first spill took place on December 22, 2004, one week prior to the IDB’s disbursement of the entire loan. The rupture spilled 80 cubic meters, reaching the Urubamba River. Following an inadequate response from government authorities as to the cause of the spill and remediation efforts, native communities staged a protest in January 2005 and refused to attend the public audience for the Environmental Impact Assessment of Block 56, the second phase of the Camisea project. The second incident took place on August 29 of last year in La Mar Province, causing TGP to suspend the pipeline flow for four days. Then on September 16 a third spill took place in Toccate, Ayacucho, spilling over 400 cubic meters and leading to the evacuation of 200 residents. A fourth spill occurred on November 24, 2005 in the protected Machiguenga Communal Reserve, spilling approximately 6,000 barrels of gas liquids, which resulted in native communities staging a ten day river blockade, demanding remediation and full transparency about the spills. The latest rupture, on March 4, 2006, involved 750 cubic meters of leaked gas liquids and caused an explosion near the community of Kepashiato that burned up to 35 acres and injured several settlers who suffered from severe burns and respiratory problems.
A recent independent report by the environmental consultancy E-Tech International presented on February 27, 2006 at the IDB’s third Camisea public meeting in Washington, DC confirms many of the same conclusions reached by the URS , in its analysis of the project for the IDB in 2003. E-tech International’s report concludes that the Camisea pipeline was hastily built by unqualified welders using corroded surplus piping from other projects. The report states that the pipeline was laid precipitately on difficult terrain to avoid onerous late-completion fines that could have totaled $90 million. The report also concludes that nearly 185 kilometers of the pipeline remains at high risk of rupturing.
At the same IDB February 2006 public meeting on Camisea, the IDB committed to meet with Peruvian civil society groups to agree on terms of reference for an independent audit of social and environmental impacts and compliance of the project, an audit which the Bank has the contractual right to initiate. Although the Bank is making progress toward an audit, it remains to be seen if the IDB will honor its promise to involve civil society in developing the terms of reference and selecting truly independent auditors.
2) Protection for the Nahua-Kugapakori Reserve
According to the Peruvian Ministry of Health, outbreaks of infectious disease in neighboring Machiguenga communities have greatly increased the risk of illness among the vulnerable populations in the Reserve. Their vulnerability was made tragically evident by the 22 deaths between August 2002 and May 2003 that were documented by Peru’s energy regulatory agency, OSINERG.
At the February 8, 2005 Camisea public meeting, Robert Montgomery reported that $1.7 million was available to finance a protection plan for the Reserve. No significant results have been evident. So far, OSINERG has hired one sociologist to address social and health issues within the Reserve.
According to a recent report by Peru’s national ombudsman office (Defensoria del Pueblo), quoting an earlier study by the Peruvian Ministry of Health, there has been contact between workers from Pluspetrol’s subcontractor, Veritas and isolated indigenous peoples within the Territorial Reserve. The Health Ministry has reported that the company has not complied with its anthropological contingency plans, and that there is evidence of forced contact with voluntarily isolated populations. The Ministry reports that the contingency plans do not take into account or take responsibility for additional risks from physical contact with these populations. The Health Ministry concludes that the gas extraction, deterioration of the downstream food resources base, increased economic activity in the zone, and the increased mobility of the local population and company personnel have produced undeniable effects on the Nanti territory and a potential health threat that is disproportionate to the population size.
The Bank and project companies have been repeatedly warned about the dangers the project poses for vulnerable, isolated native peoples and the need to halt construction of the two remaining drilling platforms planned for the Cashiriari field inside the Reserve. Civil Society organizations have also repeatedly advocated for real, good-faith efforts to explore the use of Extended Reach Drilling (ERD) technology as a viable alternative to reach the Cashiriari deposits without further incursions into the Reserve – yet to date evaluations of ERD by the project companies have not been in good faith rather, they have been designed to reach a conclusion of infeasibility.
Furthermore, in 2005, the Government of Peru signed agreements for three
additional hydrocarbon blocks that overlap other territorial reserves for
indigenous peoples living in voluntary isolation. Though the IDB’s “additionality” was supposed to lie in building the capacity of the Peruvian government to approach further projects of this nature in a different way, the threats from hydrocarbon development to the last isolated and nomadic indigenous peoples in the Peruvian Amazon have only multiplied.
3) The Camisea Fund
A $1.35 million component of the IDB’s public sector loan to the Peruvian government was dedicated to elaborating and initiating a Fund that, according to the Bank’s own loan proposal, was to be the primary mechanism for ensuring that affected communities benefit from this project. As such, the Camisea Fund (FOCAM) was initially designed (via a participatory process) as an independent entity so as to resist political pressure, with full transparency and with clear eligibility criteria for projects that would prioritize the most vulnerable (indigenous and settler) communities within the project’s area of influence.
The final FOCAM law and regulations, however, included none of these elements to ensure transparency and an efficient and effective use of resources. Instead, the Camisea Fund now only supports regional and municipal bureaucracies in other parts of the country according to a pre-determined formula – without any social or sustainability criteria, nor transparency requirements. Perversely, what was intended as a Fund for ecological protection and for development of indigenous communities and vulnerable groups may now lead to the exact opposite, as the recipient governments might very well use the money to build roads through indigenous territories that could only compound the damage and risks to the region’s fragile rainforest environment.
In addition, within days of the IDB’s full loan disbursement to the Camisea project consortium in late 2004, the Peruvian government passed a law assigning 40 percent of the central government’s royalties from Camisea to the military. This decision appears to be contributing to an arms race with neighboring countries.
4) Institutional strengthening of the Peruvian government
The Camisea Project, has had no impact in strengthening the Peruvian government in its role of environmental and social oversight of hydrocarbon projects. According to the Peruvian government’s own reports, it has actually weakened government regulation.
The Grupo Tecnico de Coordinacion (GTCI Camisea), responsible for coordination supervision and enforcement of the environmental and social aspects of the project, has failed to complete its role. Frustrated, Peru’s national ombudsman office (Defensoria del Pueblo) left GTCI Camisea in 2005 after it went more than half a year without meeting and repeatedly denied funding for projects related to the protection of human rights. Peru’s Consejo Nacional del Ambiente (CONAM) reports that, because GTCI is part of the same sector of the Ministry of Energy and Mines that promotes and controls production activity, it does not permit regulatory objectivity. The Peruvian press has also reported on the GTCI’s failure to accomplish its objectives, and communities report that the state had virtually no effective presence on the ground during the exploration and construction phases of the project.
Meanwhile, the indigenous communities affected by the project continue to live in conditions of extreme poverty, now with the added pressure of contaminated drinking water and fisheries. Health care continues to be deficient in communities. Besides malnutrition, Peru’s national ombudsman office received reports of 16 cases of syphilis in two Machiguenga communities attributed to prostitution at Techint worker camps. El Comercio, one of Peru’s most esteemed media outlets, undertook a three-week field investigation and did an entire series reporting on the social and environmental impacts – and almost complete lack of benefits – experienced by affected indigenous communities in the Urubamba region. The near-total lack of the Peruvian government’s capacity to protect the health and environment of affected communities brings into question the value of the investment that the IDB has made in Peru’s governmental institutions. Of course, while results were slow to arrive in the institutional-strengthening project loan, this did not slow project construction nor did it prevent IDB financing of the project.
5) Independent Monitoring System
Current government, company and IDB monitoring systems have failed to yield credible results, particularly in light of the five spills since the start of project operations. For more than two years, civil society has been demanding a truly independent monitoring system commensurate to the project’s risks, one that will merit the confidence of affected communities and civil society and that will result in timely resolution of problems as they arise. But after more than two years of discussion, the IDB has yet to acquire funds for and establish this system, despite a commitment by then Executive Vice President Dennis Flannery during the Bank’s 2004 annual meeting in Lima.
Furthermore, while the World Bank established a truly independent panel of eminent experts with a $600,000 annual budget for the Chad-Cameroon pipeline – arguably a less risky project than Camisea – TGP has committed a mere $40,000 which is holy inadequate for the establishment of a truly independent system. The IDB has neither considered nor secured funding for an independent monitoring system for Camisea.
6) Strategic Environmental Assessment (SEA)
For more than a year, civil society has been informed by PRI staff that a SEA is planned for the Lower Urubamba River Valley. The SEA would serve as a rational planning tool for participatory planning for the Lower Urubamba. In its February 2006 public meeting on Camisea, the IDB committed to work with Peruvian civil society on the terms of reference for the proposed SEA. However, Block 88 is now mostly constructed, Block 56 is already in process of development, and at the meeting it was made clear that hydrocarbon planning and development for the rest of the Lower Urubamba will proceed without waiting for the results of the SEA. The IDB also declared its intention to begin due diligence for financing associated with Block 56 before the SEA has even begun. Thus the whole purpose of the SEA – upstream participatory planning of regional development – becomes moot if hydrocarbon development of the entire region is planned and proceeds without being informed by the SEA.
There are already three new concessions adjacent to Camisea’s Block 88: Block 56, also operated and owned by the same Camisea consortium; Repsol’s Block 57; and Petrobras’ Block 58, totaling nearly 2.5 million acres. In 2005 alone there were 16 new concession contracts awarded in the Peruvian Amazon while 7 additional contracts are in the process of negotiation.
7) Health and Cultural Impacts on the Machiguenga
Peru’s national ombudsman office reports that the Camisea project has altered the traditions, production and identity of indigenous peoples living in the project area of influence: “The concession of land for natural resources exploitation represents a continuous risk for the subsistence of native communities, their cultural traditions and health….” The report also identifies the introduction of syphilis, respiratory illnesses and influenza, which have led to death in some native communities, and highlights the lack of baseline data to identify health indicators.
Because of water contamination from pipeline spills, several Machiguenga communities have been unable to drink, bathe, wash clothing or fish in streams that they traditionally depend on for subsistence. Families in these communities are dependent on handouts from TGP of tuna and other processed foods for their survival; and it now appears that even these handouts may cease now that water quality has been qualified as acceptable – even though the fish stocks have decreased. Congruently, local health centers chronically lack the staff and supplies to meet even basic health needs.
8) Camisea II – Block 56
In September 2004 the Peruvian government signed a contract for Block 56, part of what is dubbed Camisea II, with the same upstream consortium involved in the initial Camisea project. Since then, groups have warned the IDB that the project is expanding in disregard of the Government’s letter of commitment to the IDB requiring “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 IFC, regardless of whether they receive official public financing.”
Just as in the case of the first phase of Camisea in Block 88, the demands of indigenous organizations for a transparent, free and informed consultation process regarding Block 56 were ignored. Demands for collective bargaining are similarly ignored, as project companies move forward with negotiations on a community-by-community basis. Nevertheless, it is understood that the IDB intends to begin formal due diligence for financing a portion of Camisea II.
